OFFERS TO PURCHASE

There is a lot of misinformation and unlawful practices in our industry concerning the presentation of Offers to Purchase from prospective Buyers to Sellers by Listing Agents.  Listing Agents may not arbitrarily decide not to present an Offer to Purchase to their Seller Client for any reason. 

 

Some of the reasons reported are:

 

  1. “I will not present your Offer to Purchase unless you use our firm’s Offer to Purchase Form” or  “the TAR Contract Form.”

      [ Agents cannot require a Prospective Buyer or cooperating firm to use a specific

      Offer to Purchase Form.]

 

  1. “You have to give me a copy of your Agency Disclosure Form before I’ll present your Offer to Purchase.”

[ There is nothing in Tennessee Law that requires a Cooperating Agent to give the Listing Agent a copy of his Agency Disclosure Form.  Article 16 Standard of Practice 16-10, 16-11, and 16-12 of the REALTORS®’ Code of Ethics requires REALTORS®, in whatever capacity they’re working  in a real estate transaction,  to provide Written Confirmation of their Agency relationship to Seller/landlords no later than the execution of a purchase agreement or lease.]

 

  1. “You have to give me a copy of your Buyer Agency Agreement before I’ll present your Offer to Purchase.”

[ There is nothing in Tennessee Law that requires a Cooperating Buyer’s Agent to share a copy of  his Buyer Agency Agreement with anyone except his Buyer Client and Principal Broker.]

 

  1.  “I don’t like the way you’ve written this Offer to Purchase. Unless you rewrite it I’ll not present it to my Client.”

[ A seller client can make this “call” with his Agent’s guidance.  An Agent cannot.]

 

  1. “Surely your Buyer is joking.  I’ll not present an Offer like this ( price too low, too many terms and conditions, too many contingencies and etc.).”

     [An Agent can suggest his Seller Client not consider this type of an Offer, but, an Agent cannot make this call.]

 

  1. I won’t present any Offer to Purchase without Earnest Money”.

[ Earnest Money is not essential nor a required component to make an Offer to Purchase.]

 

  1. “My client is currently considering an Offer and I won’t ‘muddy the stream’ by presenting multiple offers until he decides on that one.

[ You should advise your Client that he can accept the “best” offer; he can inform all potential purchasers that other offers are “on the table” and invite them to make their “best” offer; he can “counter” one offer while putting the other offers to the side awaiting a decision on his counter-offer; or he can “counter” one offer and reject the others.]

 

All of these reasons for not presenting an Offer to Purchase are violations of Laws, Rules, the REALTORS® Code of Ethics and Agency Agreements.

 

 

 

Who says that a Real Estate Agent must present ALL Written Offers to Purchase?

ü     Federal Law:  Title VIII of the Civil Rights Act of 1968- “All written offers to purchase must be presented to property owners without regard to Race, Color, Religion, Sex, Handicap,  Familial Status, or  national origin.”

ü     Tennessee Law:  Title 4 Chapter 21 Section 601 #(3)- “Refuse to receive or transmit a bona fide Offer to Purchase, rent or lease on real property.”

ü     Tennessee Law:  Title 62 Chapter 13 Sections 403 and 404-  “The statuary duties owe by a licensee to his client include the receiving and presenting of All Written Offers to Purchase.”

ü     The Tennessee Real Estate Commission: Rule 1260-2-.08-  “A broker or affiliate broker promptly shall tender every written Offer to Purchase or sell obtained on a property until a contract is signed by all parties.”

ü     The REALTORS® Code of Ethics:  Articles 1, Standard of Practice 1-6 - “REALTORS® shall submit written offers and counter-offers objectively and as quickly as possible.”

ü     REALTORS® Code of Ethics:  Articles 1,Standard of Practice 1-7- “When acting as listing brokers, REALTORS® shall continue to submit to the seller/landlord all Offers and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing.”

ü     The Rules of the Multiple Listing Service of the Knoxville Area Association of REALTORS®: Section 2.1 Presentation of Offers -        “The broker must make arrangements to present the offer to purchase as soon as possible, or give the cooperating broker satisfactory reason for not doing so.”

ü     The Rules of the Multiple Listing Service of the Knoxville Area Association of REALTORS®: Section 2.2 Submission of Written Offers - “ The listing broker shall submit to the seller all written offers until closing,  unless precluded by law, or government rules, regulation, or agreed otherwise in writing between the seller and the listing broker.” 

ü     The MLS Sales Agency Contract: Terms and Condition # 4 -  “Agent Shall, However, submit to me (the Seller) any and all written Offers to Purchase for my (the Seller’s) consideration.”

 

Real Estate Agents must present all Written Offers to Purchase to Sellers.  An Agent has a duty to point out, advise, counsel his Seller Client of the specific reasons a particular Offer to Purchase should not be considered in its present form and suggest the Seller Client either reject the Offer for those reasons or counter the Offer to address the those reasons.

 

Agents have a legal and an ethical obligation to present all Written Offers to Purchase to Sellers. There is no presentation order.  In other words - the order received means nothing. Since ALL Offers have to be presented, an Agent has a duty to help his Seller Client obtain the best “deal” possible.  An Agent’s number one duty is to promote his client’s interest.  That means an Agent has a duty to convey to his Client any and all information which may be material to the Client making a decision to accept an Offer to Purchase.

 

Another good reason for presenting all Written Offers to Purchase to a Seller Client -  a Listing Agent who refuses to cooperate with a Cooperating Agent or present an Offer to Purchase from a Cooperating Agent, has released that Cooperating Agent to present the Buyer’s Offer to Purchase directly to the Seller. When that happens, the Listing has violated agency agreement and his duty to his Seller Client and will not be entitled to a commission should that Offer result in the sale of the property.