- The Washington Times - Thursday, September 9, 2004

A reader recently wrote to complain that she felt there were no “rules” regulating multiple offers in a real estate transaction. In many instances, I have found that what is legal and acceptable practice isn’t what many buyers want to hear.

The usual first complaint from one who loses a contract to another offer is: “You should have told me you had multiple offers. That’s not fair.”

The offended party might then go looking to file a complaint or lawsuit. We are, after all, the most litigious country on the globe.

On the other hand, I’ve heard some buyers complain that they believe the listing agent is lying and only trying to push up the bidding when they are told there are multiple offers — then they demand to see the other offers.

They assume that the seller is simply trying to push up the price by claiming there are other offers when none actually exists.

Revealing the status of multiple offers is up to the seller.

The cold, hard fact is that the buyer has to sit and wait for a response from the seller, depending on whether he wrote in a deadline for responding. Nevertheless, the buyer has no legal right to know if there are more offers.

The National Association of Realtors’ Code of Ethics and Standards of Practice has several items dealing with multiple offers.

A Realtor “shall submit offers and counter-offers objectively and as quickly as possible.” In fact, all offers must be submitted until the seller has made a final decision.

“When acting as listing brokers, Realtors shall continue to submit to the seller/landlord all offers and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing. Realtors shall not be obligated to continue to market the property after an offer has been accepted by the seller/landlord ….”

As for telling buyers about multiple offers, this situation apparently became so prevalent that about a year ago, the NAR instituted the following instructions in its standards list: “Realtors, in response to inquiries from buyers or cooperating brokers shall, with the sellers’ approval, divulge the existence of offers on the property.”

The key wording in this phrase is “in response to inquiries.” It’s a kind of “don’t ask, don’t tell” situation for the listing agent. She’s not going to tell the buyer about multiple offers if the buyer doesn’t ask — however, reading the standards, you can see that the Realtor is not obliged to divulge the presence of multiple offers without the seller’s approval.

In a seller’s market, some agents will place a deadline by which all offers must be submitted. Once the offers are submitted, the agent then settles down with the seller for a marathon contract review.

The real area of contention comes when offers float in one after the other over a few days. Thus, the usual practice of dealing with multiple offers would go something like this:

• Each offer is presented to the seller for consideration.

• The seller will hear all offers before making a decision.

• A seller can accept or begin countering more than one offer at a time; however, he must set an order of precedence, i.e., primary offer, first backup contract, second backup contract, etc.

Multiple offers can be a good thing. In a fast-paced market, they are the norm. The buyer who works with an agent who understands the aggressive techniques needed to escalate an offer will win. However, you can also have buyers pull contracts during multiple-offer situations because they want to deal in a less competitive environment.

It’s interesting to hear from buyers who are outbid in the selling process and start talking about fairness in a bidding war. There’s this idea that, like children lining up at the lemonade stand, those who get there first get to drink the freshly made beverage at the price posted without any interference from the youngster in the back of the line.

In real estate, the seller doesn’t care when you got there. He or she is looking at one thing: The net dollar amount.

M. Anthony Carr has written about real estate for more than 15 years. Contact him by e-mail ([email protected]).

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