Agency Agreement Can Prevent Buyer Snag

What should you do when two clients want to buy the same property?

August 1, 2010

Q: I recently showed a house to a client, and he expressed an interest in making an offer. Later, I showed the same property to another client, and she wants to make an offer. Have I violated the Code of Ethics?

A: First, clarify your relationship with each buyer. Standard of Practice 1-2 defines a "client" as "the person(s) or entity(ies) with whom a REALTOR® or a REALTOR®’s firm has an agency or legally recognized non-agency relationship."

If both buyers are indeed your clients, Article 1 of the Code requires that you "protect and promote the interests" of each person. If you have a written agency agreement with each of these buyers, it should specify what you are permitted to do if both want to make an offer on the same property.

Many buyer agency agreements specifically allow the agent to show or present the same property to multiple clients. If you don’t have written agreements, or if your written agreements don’t specify what your duties are in this situation, you have a possible conflict of interest.

The first client to see the property could claim that you failed to protect his interests by showing the property to the second client before he had an opportunity to make an offer. But, if you didn’t make the property available to the second client, she could claim that you didn’t give her information about a property that likely fit her needs.

In any event, you should discuss this possibility with clients when you begin working with them. It’s possible that your state agency statutes address this situation. But the best way to avoid this problem is to have a buyer agency agreement that specifies what your duties are.

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.