steve_beedeRecently, I have been receiving a number of questions from listing agents concerning demands from competing agents regarding the prices and terms of other Offers. Should they? Can they? First of all, there is no prohibition in the NAR or C.A.R. Code of Ethics that precludes the disclosure of Offer terms, although some Boards of REALTORS® and companies may have more restrictive Rules. Paragraph 45 of the C.A.R. Statewide Buyer and Seller Advisory provides: “NON CONFIDENTIALITY OF OFFERS: Buyer is advised that Seller or Listing Agent may disclose the existence, terms, or conditions of Buyer’s offer, unless all parties and their agent have signed a written confidentiality agreement (such as C.A.R. Form CND). Whether any such information is actually disclosed depends on many factors, such as current market conditions, the prevailing practice in the real estate community, the Listing Agent’s marketing strategy and the instructions of the Seller.” NAR Standards of Practice applicable to all REALTORS® require that REALTORS® first have a license to sell homes and then: protect and promote the interests of the client; and second: treat all parties honestly. Standard of Practice 1-15 deals with multiple Offer situations and requires the disclosure, with the Seller’s permission, of the existence of multiple Offers. Standard of Practice 1–13 allows for the disclosure of the terms and conditions of an Offer unless the Seller has signed a confidentiality non-disclosure agreement. The key point is that the listing agent owes a fiduciary duty to the Seller to promote the Seller’s interests. That duty may be best served by disclosing the terms of existing Offers so that a better Offer may be obtained. Of course, some agents may take their clients elsewhere rather than competing in a bidding war. Further, price alone is not the only factor. To resolve these conflicts, many agents have adopted a practice of creating a time limit for submitting Offers – such as seven days from the MLS listing date – following which all Offers will be reviewed and the best accepted. While this may work in some cases, it may not necessarily produce the best Offer or any Offers at all. One factor is clear, however: it is unethical for a listing agent to intentionally “shop” an Offer amongst their own clients to obtain a greater personal gain. That would be a violation of the fairness requirement and be a use of insider information for personal gain. While the requirement to disclose the existence of pending unaccepted Offers is discretionary, Standard of Practice 3–6 requires that the existence of accepted Offers must be disclosed. This would appear to leave the disclosure of terms to be discretionary. However, once an Offer is accepted, a Contract has been formed between buyer and seller. Disclosing the terms of a Contract without the consent of the buyer and seller might constitute an unreasonable interference with Contract and expose the listing agent and seller to a legal action by the buyer. Bottom line: whether or not to disclose terms of existing Offers is best determined by discussions between the Seller and the listing agent in consideration of the many factors set forth above. The attorneys of BPE Law Group, P.C. advise and represent brokerages and real estate agents in dealing with their legal concerns and maximizing their opportunities. If you would like a consultation with us, please call our office at (916) 966–2260 or email me at sjbeede@bpelaw.com. – Attorney Steve Beede