Are listing agents required to present verbal offers to their clients?
QUESTION: I have a property listed for sale. A buyer’s agent arranged a showing of the property a few days ago. The agent just called and told me that her client is out of town but that he has authorized her to make a verbal offer. She explained the terms of the offer including the price, the due diligence fee, the earnest money deposit, and the proposed closing date. She also told me that she expects to present her client’s signed offer within a few days. I know that a verbal offer is not enforceable. Do I still have an obligation to present it to my client?
ANSWER: You are correct that in order to comply with the Statute of Frauds, an offer to purchase real estate must be in writing. If a listing agent receives a written offer, Real Estate Commission Rule A.0106 provides explicit guidance. It states, in part, that “every broker shall deliver a copy of any written… offer… to their customer or client within three days of the broker’s receipt of the executed document.”
Although Rule A.0106 makes no mention of verbal offers, we believe that listing agents have an obligation to promptly present all offers to their clients including verbal offers. Why? Agents need to remember that, under the common law of agency, they are obligated to act in the best interests of their principals. Article 1 of the REALTOR® Code of Ethics has similar guidance. It states that when representing a buyer, seller or other client, REALTORS® pledge themselves to protect and promote the interests of their client. The Real Estate Commission’s “Study Guide” includes this statement: “[A]n agent has a duty to disclose to his or her principal any information that may… influence the principal’s decisions in the transaction.”
Even though a verbal offer to purchase real estate is not enforceable, information about such an offer could be valuable to the seller. For example, the details of a verbal offer would likely impact a seller’s decision to accept, counter, or otherwise reject a pending offer from a competing buyer. If the seller’s property is already under contract, the existence of a verbal offer could impact the negotiations over requested repairs. Even if there is no contract and no competing buyer, a verbal offer could impact a seller’s decision regarding changes to the list price. The bottom line: because information about a verbal offer could influence the seller’s decision-making in a multitude of contexts, listing agents should always share the details of such offers with their clients.
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