Is Your Offer to Purchase Confidential?

June 27, 2008
REALTOR® Outlook
By Kay Wilson-Bolton The answer is, “it depends”. Buyers need to know that when they make an offer to purchase a purchase, the terms may not be confidential.Consider this. Is it unethical to tell another agent what offers the seller has rejected? Should an agent tell another agent, or another buyer, what offers have been made on a home?Agents must tell their buyers that their offers may not be confidential. The only time an agent may not reveal the actual price of any recent, anticipated or current offer is if the owner of the property instructs their agent not to tell.Remember real estate market 2005 and multiple offers, over-asking price sales, and appraisals made as instructed?In that market, if a listing agent told the agents representing buyers the amount of offers on the table, more than likely, the agent with the new offer would write an offer over asking price to secure the deal.Fast forward to real estate market 2008. Price of the home is $600,000.Seller has received offers of $495,000, $500,000 and $525,000.Assume that agent number four learns about these offers. Do you think an offer from buyer number four would be at the asking price of $600,000?More than likely, the new offer will be just over $525,000-the amount of the highest offer. It would be nowhere near $600,000.Tailoring our ethics to fit the market never feels right to me. What is right, however, is doing what our client tells us to do; not what we think we should do to make a sale.More than once I have heard agents say something like, “The price is $500,000 but the seller is flexible.” I wonder how many sellers know their agents are telegraphing that information. In reality, the seller’s agent is trying to be helpful.Nonetheless, it is an oblique price reduction. Unless it is in writing, agents better beware.It is also common for REALTOR® agents to say, “Don’t worry about the price, seller wants to see all offers.” Fifty percent of that statement is true.
While agents are trying to help their sellers, reducing their price without written permission is a failure on our part to promote the interests of our clients.Consider this conflict. Buyer writes a low offer and his or her agent states to the listing agent, “I know its low but sellers want to start here.”Unwittingly or not, the buyer’s agent just increased their buyers offered price by an unknown amount. At the least, sellers now have no fear of making a counteroffer.Another agent may ask a listing agent whether or not there have been or are other offers. The buyer’s agent may ask if the offer is from an agent within their office, and if the listing agent has written the offer. Our Code of Ethics states these questions must be answered.Surprisingly enough, the buyer’s agent may also ask what the offer is.The question is whether or not the agent should reveal the terms of the offer. The answer is yes and no-and ultimately only if the sellers says so.Suppose your seller asks you to reveal the price of an offer in order to leverage a better offer. If you, your agents or clients are uncomfortable doing this, it may have more to do with marketing style versus ethics.In fact, there’s nothing in the National Association of REALTORS® Code of Ethics (there never was) that ensured confidentiality of the terms of an offer or prevented a listing broker or agent from revealing information. None of this is meant to be tricky. All of it is meant to serve the public.We do change our business practices from time to time to accommodate our clients. The issue becomes vague when we forget what market we are in.Kay Wilson-Bolton is the broker for CENTURY 21 Buena Vista and a Bank-Owned Property Specialist serving Ventura County since

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