Disclosing Existence and Number of Competing Offers
QUESTION: I have a property listed for sale. Two offers have been received. At my seller’s request, I have informed the agents for both buyers that this is a multiple offer situation, and that their clients should each submit their highest and best offer. One of the buyer agents has asked me how many competing offers there are. Do I have to tell her that there are only two?
ANSWER: We think not. There is no specific provision in the North Carolina Licensing Law that covers this question. Under case law that has evolved over many years, it is now well settled that a real estate agent has a general duty of honesty and fairness to third persons with whom he or she does not have an agency relationship. In the context of multiple offers, the Real Estate Commission has taken the position that real estate agents must treat all prospective buyers honestly and fairly.
While there is no requirement under the Licensing Law that a listing agent must disclose the existence of multiple offers, if the listing agent discloses the existence of multiple offers to one prospective buyer, the agent must disclose that fact to all other prospective buyers. In other words, there must be a level playing field.
The fact that there are multiple offers is a fact that, when disclosed to prospective buyers, may assist the seller in obtaining a higher sale price. However, the fact that there are only two competing offers, as opposed to three or more, is a fact that when disclosed, might minimize the effect of the multiple offer disclosure. Listing agents have a duty to obtain for their principals the best bargain possible under the circumstances. Disclosing the number of competing offers to prospective buyers might violate this duty.
Agents should review Standard of Practice 1-15 in the REALTOR Code of Ethics. That provision makes clear that before disclosing the existence of competing offers, a listing agent should first obtain the approval of his or her seller client.
In conclusion, when asked about the number of competing offers, a listing agent should first obtain the approval of the seller, and then disclose to all buyers only that “more than one offer has been made”.
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