seems to then be accepted before it can be withdrawn. Sometimes, this risk is compounded by the REALTORS® letting the first buyer know that the seller has accepted another offer before the seller gives formal notice that the counteroffer to the first buyer has been withdrawn. Since the notice by the REALTORS®
is ineffective to with -
draw a counteroffer (because the notice has not been signed by the seller), it creates an opening for the first buyer to immediately accept the counteroffer before it is withdrawn by the seller and argue that he or she also has an enforceable contract. Having two buyers with con - tractual rights to purchase the property is rarely an easy or inexpensive legal problem to resolve since it often requires a court to sort out the rights of the respective parties. Moreover, the interests of the seller and the listing broker are often no longer aligned (where they can share the same attorney) since the seller will often blame the listing agent for ending up in such a mess and sometimes threatens to sue the listing broker. Listing agents must remember that their duty to their seller clients under BRRETA is to recommend their clients seek professional advice on matters beyond the expertise of the listing agent. Therefore, this normally requires the listing broker to recommend that the seller seek independent legal counsel to best advise the seller who is under contract to two different buyers.
What Do I Need to Disclose to Multiple Buyers? The question most commonly asked by REALTORS®
when a seller is negotiating with one buyer while trying to hold onto one or more other buyers interested in the property is whether the listing agent is required to affirmatively disclose to all buyers that there are multiple buyers interested in the property. As a general rule, the answer to this question is no. BRRETA requires listing brokers to “keep confidential all information received by the broker during the course of the engagement which is made confidential by the express request or instruction from the seller . . .” Therefore, if the seller requests that the listing agent not disclose the existence of multiple buyers or multiple offers, the listing agent must honor this request. However, license law also requires licensees not to make any substantial misrepresentations. How does a listing agent reconcile these competing duties if a selling agent asks whether there are multiple offers or multiple parties interested in the property? One answer is to simply say, “the seller has asked me not to discuss that”. Of course, telling another agent that you are not at liberty to discuss whether there are other offers is often a strong clue that there may indeed be interest in the property by multiple parties.
When sellers decide to keep some prospective buyers in the dark regarding other interested buyers, that decision
14IGEORGIA REALTOR®
almost never extends to the buyer with whom the seller has decided to negotiate. It usually pays to let the chosen buyer know that others are interested in the property or have made offers to encourage that buyer to be reason - able in any continuing negotiations to avoid the risk of losing the transaction to another buyer.
With prospective buyers who have made offers that are
being held in abeyance while the seller is negotiating with another buyer, the REALTOR®
should also be well-advised
to let the agents of these prospects know the exact date and time that their offers were presented to the seller. This is because some prospects may otherwise mis tak - enly believe that the seller’s delay in responding is be - cause of the failure of the listing agent to timely present the offer.
Offering $1,000 More Than the Next Highest Offer One new wrinkle in the multiple offer world is how best
to handle an offer that states it is $1,000 more than the next highest offer. For several reasons, seller’s agents should discourage buyers from making this type of offer. In tying one buyer’s offer to what another buyer is willing to pay for the property, it could result in the first buyer paying significantlymore or significantly less for the property than what the buyer may otherwise have intended. Let’s look at the examples below to better understand this.
EXAMPLE #1: Seller A has listed his property in a very desirable neighborhood for $285,000. There are multiple offers on the property and the seller asks everyone to make their best offer by a particular date and time. Buyer 1 really wants the property and is willing to pay up to $325,000 for the property. However, Buyer 1 would prefer not to pay this amount if he does not have to. Buyer 2 of- fers $305,000 for the property. Buyer 1 offers to pay $1,000 more than the next highest bidder. If the seller ac- cepts this offer, Buyer 1 will end up paying much less than he was really willing to pay.
Alternatively, the buyer may pay more than intended. Let’s look at the example below to better understand this.
EXAMPLE #2: Seller A has listed his property in a very desirable neighborhood for $300,000. There are multiple offers and the seller asks everyone to make their best offer by a particular date and time. Buyer 1 really wants the property and believes that $305,000would be more than a fair price to pay for it. However, to avoid the remote possibility of being outbid, Buyer 1 states that his offer is $1,000more than the next highest bidder with a cap of $335,000. Another buyer bids $334,000for the property. In this case, Buyer 1 is still the high bidder. However, having thought that $305,000was more than a fair price for the
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