BARRISTER'S BRIEFING: Have I Got an Offer for You!
Brian Levine | June 2019
As agents it’s common for us to make and/or receive offers on properties, at least we hope that it’s common. Because it’s common, we often forget the rules surrounding the making and receiving of offers. It’s important to keep these rules in mind so you don’t run afoul of the HGMLS Rules and Regulations or the Code of Ethics.
How to Make an Offer/Counter-Offer
Article 9 of our Code of Ethics states: “Realtors, for the protection of all parties, shall assure whenever possible that all agreements related to real estate transactions… are in writing in clear and understandable language…. A copy of each agreement shall be furnished to each party to such agreements upon their signing or initialing.”
It is important to memorialize any offer in writing. Not only does this formalize the offer, it also creates a copy of what the initial offer was for future counter-offers. It also protects the agent and the client from possible misunderstandings. Although it might be tempting to negotiate offers and counter-offers over the phone at a café with a cocktail in your hand like they do on the program Million Dollar Listings, you should absolutely avoid this.
When to Make an Offer/Counter-Offer
Article 1, specifically Standard of Practice 1-6, states: “Realtors shall submit offers and counter-offers objectively and as quickly as possible.” This tenet is also reiterated in HGMLS Rules and Regulations, Article VII, Section 7:2. The key term here is “shall.” Regardless of whether you think the offer is too low or too high, regardless of whether you don’t agree with your clients or you’ll be embarrassed presenting the offer, or, in general, you feel that the offer will be unacceptable, you must present the offer. This goes for the buyer’s agent presenting the offer as well as the listing agent receiving the offer. The bottom line is, you don’t get a say in the process.
Not only must you present the offer, it must be done “objectively and as quickly as possible.” This means that you cannot sit on the offer, or wait a day or two before presenting it. You must present it immediately. Moreover, you cannot inject your personal or professional opinion when you present it. All offers need to be presented in a fair, neutral fashion, giving no preference for one over another.
Standard of Practice 1-7, indicates that all offers and counter-offers shall continue to be submitted to the owner/landlord “until closing or execution of a lease” unless there is a signed waiver by the owner/landlord. Again, the operative word is shall. This precept is reiterated in HGMLS Rules and Regulations Article VII, Section 7:3. Standard of Practice 1-8 notes that a buyers/tenant agent must submit all offers and counter-offers until acceptance.
Requests of Proof
Standard of Practice 1-7 states that “Upon the written request of a cooperating broker who submits an offer to the listing broker, the listing broker shall provide a written affirmation to the cooperating broker stating that the offer has been submitted to the seller/landlord, or a written notification that the seller/landlord has waived the obligation to have the offer presented.” The operative terms are that the buyer/tenant agent must make a request for proof of presentation in writing at the time that the offer is presented to the listing agent. It cannot be requested after the offer is presented. The listing agent must provide the affirmation unless he has a written notice from their client stating that he/she is no longer requiring all offers to be presented. If there is a written notice, that notice must be provided to the cooperating agent instead of the affirmation.
Right to be Present
HGMLS Rules and Regulations Section VII, Sections 7:4 and 7:5 sets forth that an agent for the buyer/tenant or the owner/landlord has a right to present at the time that an offer or counter-offer is presented, unless there are written instructions from the client to the contrary (and the offering agent has the right to a copy of those written instructions). The agent cannot refuse the request unless there are instructions from the client. This applies to whether the offer is presented in person, or by conference call. However, the offering agent does not have the right to be present for subsequent discussions or evaluations between the agent and the client.
All agents must be diligent when presenting or receiving offers. It’s important to be clear and memorialize all offers and be cognizant and respectful of the offer process. Failure to do so can affect an otherwise smooth transaction and potentially cause an agent (and possibly his/her broker) to be brought up on a Code of Ethics or HGMLS Rules and Regulation violation.
Editor’s Note: The foregoing s for informational purposes only and does not confer an attorney/client relationship. For a legal opinion or advice specific to your situation, please consult with a private attorney at law.