Offers Gone MIA?

File a complaint if your bid isn’t submitted.

February 1, 2004

Q. I’ve worked with a practitioner who I feel acts unethically. He seems to sell his own listings, regardless of other offers. But I have no way to prove that other offers aren’t submitted to his sellers.

In my area, most waterfront sellers live out of state, so offers are often presented over the telephone. On occasion I’ve asked this salesperson that I be present when my offer is made to his sellers over the phone, but he has refused.

Why isn’t a signed rejection by the owner mandatory on all purchase and sale agreements? This would assure buyers that their offer was presented.

A. The Code of Ethics is quite clear about submitting offers and counteroffers to clients. Standards of Practice 1–6, 1–7, and 1–8 all emphatically require submission of offers and counteroffers. The most direct statement of this principle is in Standard of Practice 1–6: “REALTORS® shall submit offers and counteroffers objectively and as quickly as possible.” If your offer wasn’t submitted, that’s a violation of Article 1 of the Code, which requires REALTORS® to treat all parties to a transaction honestly.

If you believe your offer hasn’t been given a fair shake, you can file an ethics complaint with your local association on the grounds that your offer wasn’t presented or wasn’t presented objectively.

The issue of proving that your offer wasn’t submitted is more problematic. Many purchase and sale agreement forms include an option for the seller to formally reject the offer. Listing agents should strongly encourage sellers to formally reject any offer that isn’t acceptable and won’t be countered. However, some sellers are unwilling to sign any kind of formal rejection, even if it’s provided in the agreement, preferring to simply allow the offer to expire. The Code of Ethics doesn’t control a client’s actions.

Check your MLS rules and regulations to see if your MLS has adopted two sections in Part 15 of NAR’s 2003 Handbook on Multiple Listing Policy. One section gives cooperating brokers the right to attend the presentation of their buyer’s offer, subject to the seller’s permission. The other gives listing agents the right to be present when counteroffers they write are presented to the buyer. Neither can be present when principals discuss the merits of an offer or counteroffer with their agent or representative.

Q. I’m not yet a REALTOR®, but I intend to be shortly. And to me, ethics are everything. My question is about referral fees. Can a salesperson pay a nonlicensee for referring a customer who ended up buying or selling a house with the salesperson? Also can a salesperson hand out business cards that list a referral fee to prospective customers? What about licensee to licensee?

A.I think you’ll find the REALTOR® Code your best tool in pursuing an ethical and professional career. However, answers to some of your questions about referral fees will come from your state license law. Many state license laws prohibit practitioners from paying referral or finders fees to nonlicensed persons in exchange for business. According to some laws, acts requiring a real estate license include assisting in procuring customers for the sale or purchase of real estate. Some state laws require a license for referring a prospective buyer or seller to a licensee for a fee.

The Code of Ethics does address the issue of licensee-to-licensee compensation. Standard of Practice 16–15 requires that all payments for cooperative services between REALTORS® be paid to the brokers in charge of the company and not directly to the affiliated sales licensees. Many state license laws also require that payment of any compensation for real estate services be made to the company or broker in charge.

By the way, congratulations on joining the REALTOR® family.

Bruce Aydt

Attorney Bruce Aydt, ABR, CRB, SRS, is a national real estate educator, a Missouri real estate broker, and past chair of the National Association of REALTORS® Professional Standards Committee.

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