Low inventory can exasperate the ethical rules for offer and counter-offer presentations.
Buyer’s agents are geared up to help their clients win the property, while listing agents push for an offer with the highest price and most favorable terms. Real estate licensees need to be mindful of the specific ethical rules regarding the obligation to present all offers.
NAR Standard of Practice 1-6 and 1-7
The NAR Code of Ethics (the “Code”) requires licensees to be honest with all parties, including other real estate professionals. More specifically, licensees are obligated to present all offers to a seller and to confirm in writing that offers have been presented to the seller. Effective 2019, NAR’s Standard of Practice 1-7 on offer submission has been updated to include the following:
“Upon the written request of a cooperating broker who submits an offer to the listing broker, the listing broker shall provide, as soon as practical, 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.”
In accordance with the Code, the “Brokers Only Section” on page 10 of the C.A.R Residential Purchase Agreement (the “RPA”) has added language that requires the listing agent to provide writing confirmation to the buyer’s agent confirming that the offer was actually presented to the seller.
In addition, the Standards of Practice 1-6 requires licensees to submit offers objectively and as quickly as possible. This obligation continues even after another offer has been accepted until closing, unless the seller has waived this obligation in writing.
Buyers Agents Directly Submitting Offers to the Seller
If the buyer’s agent and broker suspect that their offer is not being presented to the seller, they may directly negotiate with the seller after reasonable efforts were made to contact the listing agent and broker. If they fail to receive a response from the listing side after 1 business day from notice (Model MLS Rule 9.1) they may generally go directly to the seller. However, the listing broker can opt out of this MLS Rule 9.1 by giving notice to MLS participants through the MLS. If the listing broker precludes the buyer agent’s right to direct negotiation, then any direct contact to the seller made by the buyer’s agent or broker can be a violation of part 16-13 of the Code.
Before contacting a seller directly, the buyer’s agent should 1) first contact the responsible broker of the listing agent, 2) send a letter to request the listing broker’s written confirmation that the offer has been presented, and 3) verify with their local MLS about Rule 9.1.