Legal Blog - Standards and Ethics


Case Study - Multiple Offers to be Presented Objectively

Sep 7, 2016

Standards and Ethics

Case #1-29: Multiple Offers to be Presented Objectively (Adopted November, 2002)

REALTOR® Alex listed Seller Sam's house. He filed the listing with the MLS and conducted advertising intended to interest prospective purchasers. Seller Sam's house was priced reasonably and attracted the attention of several potential purchasers.

Buyer Betty learned about Seller Sam's property from REALTOR® Alex's website, called REALTOR® Alex for information, and was shown the property by REALTOR® Alex several times.

Buyer Xavier, looking for property in the area, engaged the services of REALTOR® Renee as a buyer representative. Seller Sam's property was one of several REALTOR® R introduced to Buyer Xavier.

After the third showing, Buyer Betty was ready to make an offer and requested REALTOR® Alex's assistance in writing a purchase offer. REALTOR® Alex helped Buyer Betty prepare an offer and then called Seller Sam to make an appointment to present the offer that evening.

Later that same afternoon, REALTOR® Renee called REALTOR® Alex and told him that she was bringing a purchase offer to REALTOR® Alex's office for REALTOR® Alex to present to Seller Sam. REALTOR® Alex responded that he would present Buyer Xavier's offer that evening.

That evening, REALTOR® Alex presented both offers to Seller Sam for his consideration. Seller Sam noted that both offers were for the full price and there seemed to be little difference between them. REALTOR® Alex responded, "I'm not telling you what to do, but you might consider that I have carefully pre-qualified Buyer Betty. There's no question but that she'll get the mortgage she'll need to buy your house. Frankly, I don't know what, if anything, REALTOR® Renee has done to pre-qualify her client. I hope he'll be able to get a mortgage, but you never can tell." REALTOR® Alex added, "Things can get complicated when a buyer representative gets involved. They make all sorts of demands for their clients and closings can be delayed. You don't want that, do you? Things are almost always simpler when I sell my own listings," he concluded.

Seller Sam, agreeing with REALTOR® Alex's reasoning, accepted Buyer Betty's offer and the transaction closed shortly thereafter.

Upset that his purchase offer hadn't been accepted, Buyer Xavier called Seller Sam directly and asked, "Just to satisfy my curiosity, why didn't you accept my full price offer to buy your house?" Seller Sam explained that he had accepted another full price offer, had been concerned about Buyer Xavier being able to obtain the necessary financing, and had been concerned about delays in closing if a buyer representative were involved in the transaction.

Buyer Xavier shared Seller Sam's comments with REALTOR® R the next day. REALTOR® Renee, in turn, filed an ethics complaint alleging that REALTOR® Alex's comments had intentionally cast Buyer Xavier's offer in an unflattering light, that his comments about buyer representatives hindering the closing process had been inaccurate and unfounded, and that REALTOR® Alex's presentation of the offer had been subjective and biased and in violation of Article 1 as interpreted by Standard of Practice 1-6.

At the hearing, REALTOR® Alex tried to justify his comments, noting that although he had no personal knowledge of Buyer Xavier's financial wherewithal and while he hadn't had a bad experience dealing with represented buyers, it was conceivable that an overzealous buyer representative could raise obstacles that might delay a closing. In response to REALTOR® Renee's questions, REALTOR® Alex acknowledged that his comments to Seller Sam about Buyer Xavier's ability to obtain financing and the delays that might ensue if a buyer representative were involved were essentially speculation and not based on fact.

The Hearing Panel concluded that REALTOR® Alex's comments and overall presentation had not been objective as required by Standard of Practice 1-6 and found REALTOR® Alex in violation of Article 1.
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