Real Estate Advice
Multiple Offers: Truth or Baa Baa
Dear Pat,
I recently bought a house in the area, and paid two thousand dollars
over the asking price. I know this sounds pretty normal these days,
but I made the high offer without actually knowing if there were any
competing offers. My agent says a new rule in the Realtors’ Code of
Ethics says the listing agent can’t reveal the existence of other
offers unless the seller says it’s OK. In this case the seller didn’t
give consent. So I took a shot and got the house, but I’ll never know
if I got fleeced. Does this sound “ethical” to you?
--Feeling Shorn |
Dear Shorn,
In a word: no. I feel your pain, Shorn—you have been herded afoul of
the new Standard of Practice added to the National Association of
Realtors’ Code of Ethics on Jan 1, 2003, which states: Realtors, in
response to inquiries from buyers or cooperating brokers, shall, with
the seller’s approval, divulge the existence of offers on the
property. This need for seller’s approval departs radically from our
time-honored practice of always disclosing the existence of competing
offers. Of course multiple offers nearly always work to the seller’s
advantage, but the perception nonetheless exists that the knowledge of
a competing offer might cause some buyers to avoid a potential bidding
war. So a seller who believes that such disclosure actually can hurt
his chances now can require that his listing agent keep mum about
other offers on the table, even if asked about them.
So who does this hurt? The buyer has the opportunity to see other
properties and make an offer informed by that experience to pay what
he/she thinks the chosen house is worth, irrespective of any competing
offers, right? Well, yes—but if that buyer is not allowed to know that
others have an interest in the same property, then he/she is being
denied valuable, possibly material, information about its relative
value in the marketplace.
Of course it will hurt sellers, too, if by playing
it close to the vest they prevent buyers from seeing how desirable
their property is to others. And finally, it will |
hurt listing Realtors—whose
currency is their credibility—forced by poorly
informed sellers to become silent liars about
existing offers.
So what can be done to encourage
sellers to do the right thing? Education. In 26
years I’ve brought nearly a thousand homes to
market, and I can’t think of a single case where
hiding buyer interest would have improved the
result to the seller.
Our local Association of Realtors is asking all
brokers to develop a multiple offers policy to be
agreed upon with sellers at the time of listing.
I’d bet nearly all educated sellers will agree to
full disclosure of multiple offers, so you may end
up pretty much alone in that pen of uncertainty,
Shorn. At River Realty we’ve already adopted a
no-fleece policy: full disclosure is the only
option we offer.
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Pat
Rosaves is a full-time real estate
professional living in the Seward -
Longfellow area. She has more than 27
years experience in helping people with
their real estate needs. Questions may be
sent to her at River Realty, 2543 38th
Avenue South, Mpls, MN 55406. Or call her
at 612-724-1314 or email her at
pat@riverrealty.net
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