Disclosure of Contingent Sales
Q: I called to show a property the other day and after we saw it and my buyer clients got all excited about it, the listing agent told me it was sold contingent, but to bring an offer. My buyers are weighing their options, but shouldn’t the listing agent have told me about the contingent sale before I showed the property? After all, she is a member of our board of REALTORS®, and I just think this was totally unethical on her part.
A: Good question and timely, too. The existence of a contingent contract is a material fact that listing agents must disclose to prospective buyers. But when? Certainly prior to an offer. However, to get to the heart of your question – shouldn’t the listing agent have disclosed it to me, the buyer agent – let’s look to the REALTOR® Code of Ethics for guidance.
Since 1986, the Code has required REALTORS® to disclose the existence of an accepted offer to any broker seeking cooperation. As of January 1, 2004, that provision of the Code – Article 3, Standard of Practice 3-6 – was amended to say that REALTORS® shall disclose the existence of accepted offers, including offers with unresolved contingencies, to any broker seeking cooperation.
The National Association of REALTORS® also has a statement of professional standards policy applicable to ethics proceedings (statement #31) that says, “(t)he obligation to cooperate, established in Article 3 of the Code of Ethics, relates to a REALTOR®’s obligation to share information on listed property and to make property available to other brokers for showing to prospective purchasers when it is in the best interest of the seller.”
While it’s ultimately a matter for a local board having jurisdiction over the ethics complaint to decide, in order to avoid even the appearance of a violation of Article 3, the listing agent should consider making the disclosure when the buyer agent calls to show the property – that’s a broker seeking cooperation.
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