Attorney Bruce Aydt, ABR, CRB, SRS, is a national real estate educator, a Missouri real estate broker, and past chair of the NAR Professional Standards Committee.
You can send him your ethics questions at firstname.lastname@example.org.
Q. I had an exclusive buyer agency agreement with a client. I explained to him what such an agreement entails. He signed the contract. Within a few days I showed him several homes. Later he told me he’d seen a home with another salesperson while he was under contract with me. I reminded him of our agreement. Nevertheless, he purchased the other house through the other salesperson. Can I take any action against the buyer? Did the other salesperson act unethically?
A. You raise two different issues that must be separated. First, exclusive buyer agency agreements are contracts that are enforceable in a court just as listing agreements are enforceable against sellers. Work with your broker and company attorney to understand your legal rights under this contract.
Aside from legal issues, you and your broker should decide whether the business ramifications— the cost of litigation, the likelihood of success, the potential public relations fallout—of pursuing your legal rights are worthwhile.
On the second issue, you haven’t provided enough facts. The other salesperson was required to comply with one or two of NAR’s Standards of Practice depending on whether he had attempted to enter into a buyer representation agreement with the buyer or was the listing broker. If the former, the other agent should’ve complied with Standard of Practice 16-9, which states, “REALTORS®, prior to entering into a representation agreement, have an affirmative obligation to make reasonable efforts to determine whether the prospect is subject to a current, valid exclusive agreement to provide the same type of real estate service.”
The second paragraph of Standard of Practice 16-13 adds, “Before providing substantive services to prospects, REALTORS® shall ask prospects whether they are a party to any exclusive representation agreement. REALTORS® shall not knowingly provide substantive services concerning a prospective transaction to prospects who are parties to exclusive representation agreements, except with the consent of the prospects’ exclusive representatives or at the direction of prospects.”
So if the other salesperson was the listing broker, he could complete a purchase offer at the direction of the buyer under this standard.
Q. I represented a buyer in a multiple-offer situation. According to the buyer’s instructions and with the seller’s and listing agent’s permission, I presented my buyer’s offer to the seller for $95,000. Later I learned the listing agent called the buyers he was working with, who’d offered $93,000. They raised their offer to $96,000, which the seller accepted. I wasn’t given the chance to have my buyer counter. Was that fair?
A. Standard of Practice 1-6 requires that offers be presented “objectively” and “as quickly as possible.” I can’t tell from the scenario whether the listing agent was “objective” in presenting the winning offer. If you can prove that the listing agent wasn’t, that’s a violation of Article 1 and Standard of Practice 1-6.
Standard of Practice 1-15 allows the listing agent, with the seller’s permission, to divulge the existence of other offers. From the facts you provided, this was done.
The last key concept is the client’s directive. Appendix IX to Part Four of the Code of Ethics and Arbitration Manual underscores the importance of communicating with the client about how multiple offers are negotiated. The seller wasn’t required to give your buyer a second chance. Buyers who don’t make their best offer initially aren’t guaranteed they’ll have a chance to better their offer later.
The listing agent was required to follow the seller’s instructions. If the seller wanted to accept the $96,000 offer rather than keep negotiating, the listing agent acted ethically. It’s unfortunate for you and your buyer but fair.