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Professional Standards Manual

Trading Services

2. Acting For Sellers

(h) Offers - View Entire Section

(XV) Listing and Offer Guidelines

When you are preparing, presenting and negotiating offers and counter-offers, follow these principles. Click on each of the statements below to see recommendations for handling offers.

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Guiding Principles for Offers and Counter-Offers

 

Show/Hide AnswerCommunicate early and often

When you take a listing or begin working with a buyer, explain to the client how offers and counter-offers are handled.  If competing offers are a possibility, discuss strategies.

Show/Hide AnswerThe licensee advises — the client decides

The clients are the ultimate decision makers.

A seller makes the decisions about how and when offers will be negotiated and if they will be accepted, rejected, ignored or countered.

A potential buyer makes decisions about when his or her offer will be written. Based on the licensee’s advice and the buyer’s decision, the duration of the time the offer will be open for acceptance must be considered.  A potential buyer can accept, reject, ignore or counter any counter-offers received from a seller.

All offers and counter-offers must be presented to the seller and the potential buyer, as the case may be.

Show/Hide AnswerOffers and counter-offers in writing

Offers and counter-offers should be in writing to ensure that the terms, time frames and legal obligations of the parties are understood.

Written counter-offers should include a specific time period for acceptance.

Withdrawal of a written offer or counter-offer should be made in writing. It is critically important to have written evidence of the revocation.

Show/Hide AnswerDisclosure of terms of offers and counter-offers

A listing licensee may not disclose the terms of an offer or counter-offer from one potential buyer to another potential buyer without the prior consent, preferably in writing, of the seller.

Some real estate boards may have bylaws that prohibit the disclosure of the price and terms of a competing offer.

If the seller has agreed with a buyer to maintain the confidentiality of the price and terms of an offer, no information may be disclosed. A seller who is not bound by a confidentiality agreement with a buyer may decide that a better offer could be obtained by disclosing the terms. Should this occur, the listing licensee is obliged to follow the lawful instructions of the seller.

Show/Hide AnswerFull-price offer does not obligate the seller to accept the offer

Listing property for sale is an invitation from the seller for buyers to make offers. The seller is not obligated to sell the property even if a buyer makes a full price, unconditional offer.

Show/Hide AnswerNo priority to offers

The first or highest offer made does not bind or otherwise limit the seller to act upon any offer before considering any other offers.

Show/Hide AnswerLicensee communication

Licensees should make reasonable efforts to keep cooperating salespersons informed, consistent with client’s instructions.

Show/Hide AnswerLicensees are not lawyers

Licensees should advise clients to seek legal advice regarding any questions about the legal status of an offer or contract.

 

 

The Seller Client — An informed seller will be ready to make the right decision when an offer or competing offers are received.

When taking the listing:
  • Discuss with the seller their motivation for selling. Remember, this is confidential information.
  • Discuss impact of current market conditions, e.g., season, types of financing, length of time on market.
  • Review Guiding Principles.
  • Explain that competing offers may be received and that the seller decides whether to disclose the existence and/or terms of offers to other licensees and/or buyers.
  • Confirm that the seller — not the licensee, will make decisions about how and when offers will be presented, negotiated and ultimately accepted or withdrawn.
When the offer is received:
  • Advise the seller of the receipt of the offer(s).
  • Promptly present the offer(s) unless otherwise instructed (preferably in writing) by the seller.
  • Discuss the terms of the offer(s) — if competing offers, compare terms.
  • Inform seller of any other interest in the property.
  • Potential of other offers.
  • Scheduled showings.
  • Recent showings that may require follow-up.
Seller’s options — one offer:
  • Accept, reject, counter, delay during time for acceptance to seek out other offers.
  • Explain pros and cons of each option — including the potential of a buyer withdrawing an offer during a delay.
Seller’s options — competing offers:
  • Accept one offer.
  • If an offer is accepted, the seller may also accept back-up offers.
  • Reject all offers and encourage better offers.
  • Counter one offer (may withdraw counter, in writing, prior to acceptance) — do not inform other buyers.
  • Delay acceptance waiting for another offer.
  • Ignore an offer or all offers. The seller is not obliged to respond to potential buyers.
  • Alert one or more buyers that they are in a competing offer situation.
  • Alert all buyers that they are in a competing offer situation.
  • Do not alert any buyers that they are in a competing offer situation.
  • Consider the pros and cons of each option — delaying or inviting all buyers to make their ‘‘ best’’ offer may produce better offer(s) or may discourage buyers, who may withdraw.

 

The Buyer Client — An informed buyer will be ready to make the right decision when making an offer.

When working with a buyer as that buyer’s agent:
  • Discuss with the buyer their motivation for purchasing. Remember, this is confidential information.
  • Discuss current market conditions, e.g., season, types of financing, average length of time for properties on the market.
  • Review Guiding Principles.
  • Explain that competing offers may be made — realize that in a competing offer situation only one offer will result in a sale and one or more buyers may be disappointed.
  • Explain that the seller is not obligated to acknowledge, counter or reject an offer and may inform other buyers of the existence and/or terms of an offer to obtain better terms or price; or may not accept any offer.
  • Confirm that the buyer — not the licensee, will make decisions about how and when offers will be negotiated and presented or withdrawn.
When the offer is made — discuss with the buyer the possibility of competing offers:
  • Initial offer may be the only opportunity to buy.
  • Sellers may choose not to inform buyers of the existence of other offers.
  • Seller has the right to choose to negotiate with only one buyer at a time and not reveal this to other buyers and this negotiation may continue until seller accepts an offer.
  • The terms of buyer’s offer may not be treated confidentially by the seller, or the seller’s licensee acting upon the instructions of the seller, and the price and terms contained in the offer may be communicated to other buyers to obtain better terms or price.
  • If the buyer wishes the terms and conditions of his or her offer to remain confidential, the buyer can require the seller, prior to the presentation of the offer, to sign a confidentiality agreement. If the seller refuses to sign such an agreement, the buyer can decide whether the offer is to be presented regardless.
  • Seller may accept an offer on terms other than the price.
  • All buyers may be notified to present their highest and best offer — buyer may choose to:
    • make better offer
    • leave original offer
    • revoke offer in writing if period for acceptance is current.