1. A listing agent describes an offer to an out-of-town seller over the telephone. The seller verbally indicates his acceptance of that offer, which the listing agent communicates to the buyer. Before the seller receives and signs the original offer, the listing agent receives another offer, which the seller wants to accept. Is there a binding contract with the first buyer?
Answer: No. Although the seller verbally accepted the first offer, under the Statute of Frauds there would not be a binding contract because the seller did not sign the offer. Therefore, the seller would be free to accept the second offer.
2. Negotiations have been going back and forth between a seller and a buyer for over a week. The seller is considering a counteroffer from this buyer, when another higher offer is received. Is the listing agent required to notify the first buyer that another offer has been received and give that buyer an opportunity to increase his counteroffer?
Answer: No, there is nothing that legally requires the seller to give the first buyer an opportunity to raise his offer. Of course, if the seller wishes to give the first buyer such a opportunity, he may do so, and the listing agent would have to follow these instructions.
3. A listing agent has received an offer which he is planning on presenting to the seller that afternoon. Before she makes this presentation she is notified by a cooperating agent that another buyer will probably be making an offer the next day. Should the listing agent wait until this second offer is received to present the first offer?
Answer: The listing agent must present the first offer she has received as soon as possible. Therefore, she should present the first offer that afternoon as planned. However, her fiduciary duties to the seller also require her to notify the seller that another offer may be forthcoming. It will then be up to the seller to decide whether he wants to wait for this offer. This listing agent should review the first offer to determine how long it is open for acceptance, so that it does not expire before the seller decides to accept or counter it.
4. A seller has received two offers to purchase his property. Can he make counteroffers to both buyers?
Answer: While he can do this, it is not recommended for the seller to make more than one counteroffer at a time. This is because both buyers could accept the counteroffer and deliver notice.
5. An offer is presented to the seller which is signed by the seller. The listing agent immediately calls the buyer and leaves a message on the buyer’s answering machine that the seller has accepted his offer. The buyer receives this message. Five minutes after the seller signed the offer, another offer is received which is higher than the signed offer. Can the seller accept the higher offer or is he bound to the contract he signed? The contract is silent regarding the method and delivery of acceptance.
Answer: The seller accepted the offer by signing the contract. To have a binding contract the seller’s acceptance must be communicated to the buyer. As the contract does not require that the communication be by physically returning the signed contract to the buyer, verbal notification to the buyer, would be sufficient. Therefore, the sellers have entered into a binding contract with the first buyer.
6. If I receive multiple offers on one of my listings, must I notify all of the agents/buyers that they are in a multiple offer situation?
Answer: There is nothing in the license law that requires such disclosure. Most agents do so because they believe it is the fair way to handle negotiations and that it could get the buyers to increase their offers. While this may be true, disclosing that there are multiple offers could result in one or more of the buyers withdrawing their offer because they don’t want to be in a “bidding war.” For this reason, Standard of Practice 1-15 of NAR’s Code of Ethics states the existence of other offers should only be disclosed with the seller’s consent.