Summer is upon us, and the weather is heating up — as are the conversations about timely presentation of offers. The current hot market features countless hot buyers thinking their offers have not been presented. Use the following provisions from license law and the REALTOR® Code of Ethics (the Code) to ensure you avoid falling into a transactional hot mess!
What are the timing obligations for the presentation of offers?
Both Wisconsin license law and the Code note that the presentation of offers should occur as expeditiously as possible:
The Wisconsin rules state:
“REEB 24.13(2)(b) Licensees shall promptly present all written proposals received to the licensee’s client or customer. Licensees shall not withhold any written proposal from presentation pending the party’s action on a written proposal previously presented.”
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)”
What are the listing brokers’ obligations to communicate with buyers and cooperating brokers about the presentation of offers?
Both Wisconsin license law and the Code make reference to the listing broker providing written confirmation regarding the presentation of offers:
Wis. Admin. Code § REEB 24.13(4) states:
“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.”
Standard of Practice 1-7 provides, in part:
“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. Upon the written request of a cooperating broker who submits an offer to the listing broker, the listing broker shall provide, as soon as practical, 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 … ”
So what does all this mean when a listing broker states that a seller wants offers presented at a certain time in the future?
If a seller requests a delay in the presentation of offers, there are multiple perspectives to consider. For example, the typical story in this type of situation begins when the seller instructs the broker to indicate in the MLS remarks that offers will be presented on Monday, yet prior to Monday, the property shows up as sold in the MLS. This scenario results in upset buyers and cooperating agents who relied on the broker’s and the seller’s information to their detriment. The follow-up question inevitably is: did the agent have a duty to change the MLS remarks or otherwise reach out to cooperating brokers? The following comments relate to such seller-initiated instructions.
Although waiting to review offers at a future date is a legitimate negotiation strategy for a seller to use, the implications for the licensee presentation must be considered. The instructions to the listing agent to hold offers until a certain date are ideally documented in writing, preferably in the listing contract. Notwithstanding, licensees have an obligation to promptly present all written proposals per the law.
According to Wis. Admin. Code § REEB 24.13(1), the listing broker is required to submit all offers unless the terms therein are contrary to the seller’s instructions. The seller decides whether to limit the presentation of offers with specified terms. A delayed presentation request by the seller is not returned to a term of the offer. If the seller limits presentation based on the terms therein, the listing broker may communicate the seller’s instructions to cooperating brokers. It is advisable to obtain the seller’s instructions in writing.
The seller and listing broker should have a plan if offers are submitted prior to the anticipated deadline. For example, if a seller has asked a listing agent to hold offers until a future date for review and an offer is submitted with a binding acceptance date before the future date for offer review, the listing agent should inform the seller the offer has been received and follow the seller’s instructions at that point, which may be “send the offer to me” or “add it to the pool and we can counter if necessary to create a new deadline for binding acceptance.” If the seller instructed the listing agent to present the offer ahead of the future date for offer review, the listing agent would be obligated to present the offer despite what was advertised or communicated in the MLS. The seller can accept any offer at any time regardless of whether the seller originally planned to review all offers at a future date. In the event the seller changes their mind, other buyers may then have doubts regarding the integrity of the seller, the professionalism of listing and cooperating brokers, and the homebuying process.
If a seller instructed the listing agent to hold offers until a future date, but the seller then began instructing the listing agent to present offers prior to that date, the listing agent should discuss with the seller the need to update the MLS remarks because they are no longer accurate since the seller wishes to consider offers once submitted instead of holding them for future review. The seller and the listing agent should recognize that reviewing and accepting offers before the stated future date puts cooperating agents in an unfavorable position because other buyers may become angry if they rely on the MLS information only to discover another offer is already accepted.
If the cooperating agent thinks the offer was not presented, can the cooperating agent go to the seller directly to negotiate an offer?
Generally, no. The administrative code rules and the Code address the seller/listing agent relationship as follows:
“REEB 24.13 (5) NEGOTIATION THROUGH FIRM.
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. All negotiations shall be conducted with the firm holding the exclusive right to sell, lease, or negotiate, and not with the party, except with the consent of the firm or where the absence of the firm, or other similar circumstances, reasonably compels direct negotiation with the party. A listing firm has no duty to investigate whether a buyer has granted a buyer’s agent an exclusive right to negotiate.”
Article 16 of the REALTOR® Code of Ethics states:
“REALTORS® shall not engage in any practice or take any action inconsistent with exclusive representation or exclusive brokerage relationship agreements that other REALTORS® have with clients …”
Standard of Practice 16-13 of the REALTOR® Code of Ethics states:
“All dealings concerning property exclusively listed, or with buyer/tenants who are subject to an exclusive agreement shall be carried on with the client’s representative or broker, and not with the client, except with the consent of the client’s representative or broker or except where such dealings are initiated by the client. (Adopted 1/93, Amended 1/04).”
Contacting a listed seller could be done in two possible scenarios: with permission from the listing firm to contact the seller directly, or in the absence of the firm or its agents, or other similar circumstances. “Other similar circumstances” and “reasonably compelled” are not further defined, therefore, whether to contact the seller directly comes down to a judgment call by the agent in conjunction with his or her supervising broker.
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Tracy Rucka is Director of Professional Standards and Practices for the WRA.