Thursday, January 25, 2024

A member asked me recently about the responsibility of a seller’s agent to present the offers and counter-offers they receive. 

I lean toward the thinking that any offer is better than no offer. While we’d all like to see a full-price or better offer, the reality is that offers sometimes come in lower than the listed price—sometimes a lot lower. When that happens, your job is to get the seller to counter, and then see if the buyer wants to come to the party. 

This isn’t difficult today. Just power up your computer, open your email system, create a new message and send the offer to your client. Click, click, click. Or you power up DocuSign® and do the same thing. 

In years past, it took a bit more effort. We had to pull out a snapset standard form contract of purchase and sale, ink it with words while pressing hard to make sure our writing went through the seventh page. Then we’d drive over to the buyer’s place to get them to sign, after listening to them obsess about what was to come. Next, we’d phone the seller’s agent, set up a presentation time, and drive to the seller’s home. Here, we’d listen to the seller obsess about the buyer’s offer. Then we’d drive back to the buyer, and back to the seller, over and over again. 

The fax machine was a miracle when it appeared on the scene. Soon after, we were able to email scanned copies of contracts. DocuSign®and other apps followed, allowing us to create a contract, get it signed, and send it to the other party in seconds. No more driving around. No more ingesting bad coffee and navigating rainy streets late at night. I can hear angels singing.

So when a buyer’s agent contacts a seller’s agent to let them know there’s an offer to present, what follows is, or should be, pretty darned easy. (Not the negotiating part, mind you; that’s an art form.) But at least now, getting the thing written, signed, and to its destination is easier than figuring out how to use one of those infernal downtown parking machines.

Rules 4.02 and 4.04 deal with offers. But unless you’re dealing with multiple offers, it’s Rule 4.02 you should pay attention to. The words, “offers will be presented without delay” (unless otherwise instructed by the seller in writing) are very relevant. While the rule doesn’t specifically define “present,” I think, at the very least, it means you contact your seller, set up a meeting where you describe all the details of the offer, wait for a response, and then follow their instructions.

You may be thinking that sending verbal or text messages is the way to go, but I’ve never thought it satisfactory. Yes, texting is an easy way to convey information—maybe too easy. In a text or phone conversation, it’s easy to say, for example, “Tell them to take a hike.” In contrast, when a buyer or seller is signing or countering a contract that is in front of them, they’re more invested in the process, and they’re more likely to counter it and make it better than to walk away. 

"So why wouldn’t every one of us harness that process? It’s Sales 101. I guess it’s just easier to text back and forth. Sigh. "

If you’re not convinced, take the time to review what the REALTOR® Code, Article 6, says about written transaction agreements. That is the standard. So even though texting or phoning may be faster, in my books, doing this right means getting that offer or counter-offer in front of your client and then having a conversation about it, line by line. I’d call that the gold standard.

But like King Canute trying to hold back an incoming tide, I doubt anything I can say about not texting information about buyers’ and sellers’ intentions is ever going to stop. So, the silver standard would be phoning or texting your client to describe exactly what’s in the offer and counter-offer, while telling them it isn’t sold or bought until everyone’s signed the contract (which you’ll send, as soon as you receive it). 

Now please look back and read again the paragraph about sending information by text. If there’s no contract, and someone wants to “test the waters” with a text or verbal communication, that information must be conveyed to the client too. I don’t support this, and neither does the Professional Conduct Committee, as you can well imagine. Do things in writing.

As for the possibility of a real estate agent telling another real estate agent that they won’t present an offer or counter-offer at all, there isn’t a colour or metal I can think of that would describe such behaviour. I’d say that it is an absolute breach of your agency duty of disclosure to not disclose information to a client (with the exception of having written client instructions, in advance, to not present offers and counter-offers if they don’t meet the client’s requirements). 

Here’s what BC Financial Services Authority’s Knowledge Base has to say about this:

(g) Communicate all offers in a timely and unbiased manner

Depending on market conditions, buyers and tenants will often attempt to negotiate terms in a transaction that are favourable to them. If you are representing a seller, there may be certain conditions that must be met before they are willing to accept an offer from a potential buyer. For instance, they may advise you that they are not willing to accept an offer below a certain threshold, or that they will only entertain an offer if it is not subject to a property inspection. While it may seem prudent to save your client time by only showing them offers that you feel meet their needs, the Real Estate Services Rules are clear in that all signed offers must be presented.

While on the surface a particular offer may appear to be lacking in some respect, offers can be negotiated by the parties and that unacceptable offer may end up being one that your client chooses. Your client may also realize, after receiving only one offer, or multiple offers that do not meet their needs, that they need to temper their expectations and reduce their requirements.

It is never up to you to decide which offers are worthy of being presented to your client.

In summary, not presenting an offer without written client instructions is a breach of agency, giving rise to legal, professional, and regulator risk. 

Of course, in meeting this standard, you have to be prepared for unhappy reactions sometimes. We’ve all been there, suffering clients’ reflected frustrations at being presented with an unwelcome offer. This should never discourage you from telling clients what their position is. If you have problems doing this, talk to your managing broker. They’ll have lots of ideas about scripting and setting the right tone at the beginning of the relationship. For example, “I’m the agent, you’re the client. I’m the messenger. I give you the information and my opinions if you want them. You make the decisions.” Or, “Whoa, I get that the offer isn’t what you want to see. Don’t shoot the messenger. Let’s counter it and see what the buyer does.”

One more thing to think about if you’re still leaning toward texting in these situations: aggravating colleagues isn’t the best way to build your business, given that we all depend on each other to get our clients to their destination. Terse, testy, and cryptic text messages back and forth during the process are very likely to make matters worse.

Have a look at the imagined text thread below: 

Seller’s agent:  Your offer is too low.

Buyer’s agent: Did you present it? Why didn’t they decline or counter? 

Seller’s agent: Have you looked at the comps? Other units have recently sold for more in this building.

Buyer’s agent: Yes, I’ve seen the sales prices of other units. What did your client say about my client’s offer?

Seller’s agent: I don’t want to present a low offer and make my client angry. Make a better offer. 

Buyer’s agent: I’m sure you know that agency requires that I present my buyer’s offer to you and that you’re required to present it to your client. My client knows this. It’s not up to buyers’ and sellers’ agents to judge an offer. That’s for them to determine. Will you present my client’s offer?

Seller’s agent: No, and I don’t plan to. Consider your client’s offer rejected.

How on earth would a conversation like this contribute to raising our collective professionalism, something, members tell us they want the Board to do something about?

You be the judge.