The listing contract, the Administrative Code and the REALTOR® Code of Ethics all address how a broker presents an offer to purchase or other transaction documents. Lately, there has been much contention about how offers are presented, and claims indicate that listing brokers are either not presenting offers or are not communicating with cooperating brokers and buyers about the seller’s response.
Therefore, this article looks at the elements of proper presentation and communication between brokers about written proposals, including new provisions in the REALTOR® Code of Ethics.
Wis. Admin. Code § REEB 24.13 addresses several aspects of the presentation of offers, prompt presentation, not withholding offers pending action on other offers, objectivity when presenting, discussion of pros and cons, and how to respond once offers are presented.
Prompt presentation
How long does a listing agent have to present an offer?
According to Wisconsin law and the REALTOR® Code of Ethics, the listing broker is required to promptly present all written proposals.
Wis. Admin. Code § REEB 24.13(2)(b)
Licensees shall promptly present all written proposals received to the licensee’s client or customer.
Similarly, the REALTOR® Code of Ethics, in Standard of Practice 1-6, states, “REALTORS® shall submit offers and counter-offers objectively and as quickly as possible. (Adopted 1/93, Amended 1/95).”
Don’t withhold offers if others are in the mix
The cooperating broker knows the current real estate climate is a seller’s market and believes there are multiple offers on the table. The cooperating broker thinks the buyer’s offer has not been presented to the seller, though, because the seller is negotiating with other buyers. Can the seller look at one offer at a time?
In Wisconsin, the seller is provided all offers.
Wis. Admin. Code § REEB 24.13(3)(b)
Licensees shall not withhold any written proposal from presentation pending the party’s action on a written proposal previously presented.
In a situation where there are multiple buyers, the seller may consider the use of the WB-46 Multiple Counter-Proposal, allowing the seller to negotiate simultaneously with more than one buyer. Once all the offers are presented, it is the seller’s decision — not the listing agent’s — about which offer or offers to entertain.
Fair presentation and objectivity
The cooperating agent sent an offer to purchase on a property to a listing agent. The listing agent stated he emailed the offer to the seller and did not talk to the seller about it. The listing agent just emailed the offer to the seller, who rejected the offer. Upon contact, the listing agent refused to communicate with the cooperating agent about the buyer’s offer. There is concern that the listing agent did not treat the buyer fairly by refusing to present the offer in an unbiased manner. What does it mean to present objectively?
Licensees are to promptly present all received written proposals to the client or customer.
Wis. Admin. Code § REEB 24.13(3) FAIR PRESENTATION OF WRITTEN PROPOSALS.
(a) Licensees shall present all written proposals in an objective and unbiased manner to their clients and customers.
Presentation includes more than emailing the offer. For example, what are the pros and cons of an inspection contingency with or without a right to cure? Do the dates and deadlines make sense in implementation? Has the buyer included a Closing of Buyer’s Property contingency, and if so, how would that affect the seller trying to purchase another property? Granted, a licensee is not required to provide legal advice, however, general discussion of the written proposal is part of the presentation process.
Notification
An agent believes a listing agent in the area isn’t presenting offers in a timely fashion to the seller and holds off to see if other offers comes in. How can the concerned agent hold the listing agent accountable for this behavior to ultimately avoid this in the future?
As an agent for the buyer, the agent may request a statement of when the offer was presented.
Wis. Admin. Code § REEB 24.13 (4) NOTIFICATION OF ACTION ON WRITTEN PROPOSAL.
Licensees shall promptly inform their clients and customers whether the other party has accepted, rejected, or countered their written proposal. A licensee shall immediately provide a written statement to the other party’s firm that includes the date and time when the written proposal was presented when such a statement is requested by the other party or the other party’s firm. A licensee shall immediately provide a written statement to the other party’s firm that includes the date and time when the written proposal was rejected or had expired without acceptance when such a statement is requested by the other party or the other party’s firm.
The Wisconsin WB offers are designed with a place for the broker to identify when an offer was presented. The easiest way for the listing broker to provide the requested statement is to complete the presentation lines of the offer and return the offer to the cooperating agent. If the listing broker does not use the offer for its intended purpose, the listing broker could, after the cooperating broker or the buyer makes the request, send a stand-alone written statement about when the offer was presented to meet the § REEB 24.13(4) requirement. The offer also includes a place for the seller to accept, reject or counter the offer. While licensees are obligated to follow Wisconsin license law, keep in mind the listing agent can never require the seller to sign the document acknowledging the seller’s rejection. If the listing agent is not responsive to the agent’s request for such a statement, the agent may offer the listing agent a reminder about the requirements of Wis. Admin. Code § REEB 24.13(4).
Similarly, 2019 modifications to the REALTOR® Code of Ethics now require the listing broker to provide affirmation stating the offer was submitted. The additions to the Code of Ethics are underlined in the excerpt below.
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 his obligation in writing. Upon the written request of a cooperating broker who submits an offer to the listing broker, the listing broker shall provide a written affirmation to the cooperating broker stating that the offer has been submitted to the seller/landlord, or a written notification that the seller/landlord has waived the obligation to have the offer presented. REALTORS® shall not be obligated to continue to market the property after an offer has been accepted by the seller/ landlord. REALTORS® shall recommend that sellers/landlords obtain the advice of legal counsel prior to acceptance of a subsequent offer except where the acceptance is contingent on the termination of the pre-existing purchase contract or lease.
Who is who?
The offer to purchase was delivered to the listing firm. When preparing to present the offer to the seller, the listing agent observed that the names on line 1 of the offer did not appear to match the buyer names and signatures on page 9 of the offer. How can the broker move forward with this inconsistency?
Competent practice includes looking at the offer to identify inconsistencies such as this. The listing broker would promptly present the offer to the seller to comply with presentation rules. In this situation, the presentation will include observations about different signatures and spelling of buyers’ names. The agent may also communicate with the cooperating broker to determine why there appears to be an inconsistency between the names and signatures. The offer may then be countered, accepted or rejected by the seller based on information obtained.
In the listing contract, the seller stated that he wanted to take the foyer mirror. The offer, however, was drafted by the buyer, including the mirror. How might the inclusion of the mirror affect the presentation of the offer?
When entering into the listing, knowing the seller wants to take items after the sale, the listing agent may suggest the seller remove the items before photographs are taken of the property or showings of the property are conducted. A potential buyer doesn’t know what he or she is missing if the buyer never sees the item in question. In the event the mirror cannot readily be removed, or is a fixture by definition in the offer, the listing agent will share this information with cooperating agents. Even if this information is shared, a buyer may want the mirror included as part of the sale. Knowing the offer determines what the buyer buys and the seller sells, it is critical the item in question is specifically excluded. Before presenting the offer, the broker should carefully review the listing contract to assure the offer excludes any items the seller wants to retain after the sale.
The cooperating agent wants to attend the presentation to influence the seller to accept the buyer’s offer. Is this permissible?
According to Wisconsin law, negotiations are to be conducted via the listing agent when the seller has an exclusive right-to-sell listing.
Wis. Admin. Code § REEB 24.13(5)
A licensee may not negotiate a sale or lease of real estate directly with a party if the licensee knows that the party has an unexpired written contract in connection with the real estate which grants to another licensee an exclusive right to sell, lease, or negotiate.
Per the National Association of REALTORS® MLS Handbook, a cooperating agent may ask to attend the presentation of the offer. The MLS Handbook makes a distinction between presentation and discussion or evaluation of the offer. A cooperating broker will not be privy to discussion or evaluation of the offer.
Section 9 Rights of Cooperating Brokers in Presentation of Offers (Policy Statement 7.73)
Cooperating participants or their representatives have the right to participate in the presentation of any offer they secure to purchase or lease to the seller or lessor. They do not have the right to be present at any discussion or evaluation of the offer by the seller or lessor and the listing broker. However, if a seller or lessor gives written instructions to a listing broker that cooperating brokers may not be present when offers they procure are presented, cooperating brokers have the right to a copy of those instructions. This policy is not intended to affect listing brokers’ right to control the establishment of appointments for presentation of offers.
Tracy Rucka is Director of Professional Standards and Practices for the WRA.