What to disclose in multiple-offer situations

REALTORS® have an obligation under Article 1 of the Code of Ethics to promote the interests of their clients while treating all parties honestly. Texas Real Estate Commission rules require real estate practitioners in Texas treat people fairly.

While the Code of Ethics and TREC rules allow real estate brokers to “shop” the terms of offers (if not prohibited by law, regulation, or confidentiality agreement), disclosing terms of an offer to some prospective buyers and not to others or handling certain offers differently can open you up to accusations of dishonesty or unfair treatment.

Also keep in mind that clients can choose to disclose offer terms. For example, a seller could shop the terms of an offer to potential buyers in hopes of soliciting stronger offers. The choice of what to disclose about offers is the client’s alone.

Buyers should be made aware that sellers are under no obligation to keep the terms of an offer confidential unless the seller has agreed to keep them confidential. This does not relieve you of your duty as a REALTOR® to report any willful discrimination or fraud.

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12 Responses to What to disclose in multiple-offer situations

  1. Susan horton says:

    Great addition for Broker Responsibility training…..
    Training buyers agents as to what to asked for and how to request the proper information
    and listing agents as to how to secure this information from the seller
    So they are prepared for buyers agents questions.
    Better yet maybe we add this information to our listing
    Agreement. It could go in the section related to back up offers.
    More is better in this document. Oh and how wonderful would it
    Be to have this in MLS so we know upfront… transparency delux…

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  2. Joe Shurgot says:

    Quite frankly, I found this to be an ambiguous and worthless article. What did it say? Realtors are required to treat their clients fairly? I thought we all knew that. I am normally in a buyer’s agent position for “multiple offer situations.” To me, the seller should be required to disclose how many offers they have and the terms of those offers. What constitutes “multiple offers?” Are these offers full price or several thousand below full price? It gives the seller an unfair advantage over the buyer by playing on their emotions that the house they are now bidding on auction style may go to someone else. Imagine going to the grocery store and someone in line behind you tells the cashier they are willing to pay more for your groceries. Ridiculous, isn’t it?

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    • When there is no scarcity in the grocery store yeah that is ridiculous, but real estate and the emotional purchases have much scarcity, multiple contracts reflect that in our area, especially when a buyer falls in love with a home.

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  3. Informative article. What happens if the client is selective i.e. asking to shop ONLY with buyers with cash offers? Would an agent violate Article 1 of the Code of Ethics?

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  4. Rick DeVoss says:

    I agree with Joe….
    ~This article opens up a can of worms for an inexperienced agent. It says that a seller may do something that an agent may not do. ~But how many agents understand that the seller can’t tell you to repeat such things…??
    If what you are saying is illegal for an agent to say, then you can’t repeat what your seller said.
    > We are faced with a bad situation every time the listing agent says “We have a multiple offer situation.” ~How does a buyer’s agent know that is the truth? How do we know how many offers there are, and whether they are cash or financed? How can you possibly compete with such vague information if you are the buyer?
    ~Making a second and higher offer to the seller is like shooting yourself in the foot.

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    • It’s a good situation, lets not decide on having a bad situation because a lack of experience but a learning opportunity for agents.

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      • Rick DeVoss says:

        I can’t find anything “good” about having multiple offers on the same house.
        ~And agents don’t need a “learning opportunity.” The agents in this market are working overtime for the same results we used to get when we had a stable market.
        ~Maybe we should figure out how to go back to the old rule of “First come, First served.” Why not let the early bird get the worm?
        Too many buyers (…and their agents) have gotten wise to this multiple bidding market, and they submit inflated offers just to snag the emotions of the greedy seller. Then they either can’t perform at that level, or they pull the multiple offers that they have been making, and go with the one house they really want. ~Everyone else in the whole process is wasting their time… And I don’t like wasting my time!

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  5. Mary Chavez says:

    This article left me with same questions. Why can’t the seller be required to disclose such offers in a more detailed manner for the buyer? Example: Two cash offers over asking price, one offer financed.
    The line of “multiple offers submit your best and highest does not offer much to the prospect buyer.

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  6. Jarod Marcus says:

    I’m sorry, but I have to disagree with the Code of Ethics on this one. Disclosing the terms of offers is every bit as unethical as a buyer writing offers on multiple properties, tying up multiple sellers, and then opting out of the contracts they don’t want. These kinds of shenanigans always come out when the market is way out of balance, and unfortunately, there are always agents who are willing to cross that line, because they think they are doing right by their client. I think agents are losing sight that they should never burn the bridge they may have to retreat across, and that ones reputation will follow them throughout their career.

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  7. Can we now have Realtors disclose multiple offers to us appraisers? Most are very skeptical about the idea, but with multiple offers I can use this as a data point to show demand for the property, especially when comps aren’t meeting sales price but in a growing market. Can someone help me understand why disclosing terms to buyers is unethical as a client as it appears to be suggested in the comments?

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    • Rick DeVoss says:

      “showing demand” for an individual property should be obvious from the overall market conditions. The house is worth what it is worth, regardless of how many offers it got on it. (Maybe that was due to clever marketing by the listing agent, and therefore had no bearing on the value of the house on the next block.) Too many appraisers think it is their job to put a lid on an accelerating market, and keep the values down.
      ~What if the first offer you get is the best one, and you don’t need to advertise for multiple offers??

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      • It’s a point of data, not a deciding factor, when my data doesn’t show trends and is ambiguous I look for more data. I always try to have a conversation with the listing agent on marketability of the property even though their position is biased towards that client. If the first offer is the best one, then great! I don’t disagree with you. Some homes in markets have more demand than others, due to finishes and location, this demand can be very obvious from buyer reactions and multiple contracts, sometimes when there is a gap between sales price and developed opinion of value it is due to finishes and location which can be supported with this further data as a comparable is not always available that is the same.

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