Mr. Cox graduated from Texas Tech University in 1982 with a Bachelor of Arts Degree; and graduated from Texas Tech University School of Law in 1986 with a Doctorate of Jurisprudence. Mr. Cox’s practice centers primarily on civil litigation involving the defense of service providers such as real estate agents, appraisers, surveyors, title agents, home inspectors, pest inspectors, insurance agents, securities brokers/dealers, and anyone else who gets sued for providing a service.
Everyone in real estate is welcoming the return of a hot housing market. My phone has been ringing regularly with questions that certainly indicate homes are selling quickly everywhere. One call I get frequently during markets such as these goes something like: “My client seems to have executed two contracts for their house.” Some of you are rolling your eye balls wondering how any agent worth their weight could allow that to happen. But this is a problem that can happen to even the most seasoned real estate veteran. The advent of email has made the possibility of two contracts being executed greater than when offers were hand delivered or even faxed. The best way to avoid this problem is to follow one simple rule: “Work only one offer at a time.”
All offers received by an agent must be given to the sellers as they are received by the agent. Some agents are under the impression they need to give only one offer to the seller at a time, and in the order the agent receives them. Other agents believe it is the agent’s responsibility to filter the offers and send to the seller only the offer the agent considers the best. This sounds ridiculous to most of you, but it happens often. It is the duty of the listing agent to give all offers to the sellers as soon as the agent receives them.
Once the offers are given to the seller, then the agent can go over each of them with the sellers and discuss the differences in them, but the sellers must ultimately decide which of the offers they want to work, and that decision can be based on anything the sellers think important. Some buyers believe the sellers have a duty to work their offer, and that offers should be worked in the chronological order in which they were received. That is not true and the sellers can work any offer they chose, and there is no duty to work them in the order they were received, or even to work them at all.
Sellers may choose not to work any of the offers in order to see if they can get a better deal. In such a situation, it is best to reject all offers and invite the potential buyers to resubmit with their best offers. It is permissible to tell the buyers’ agent multiple offers were received, and all were rejected with an invitation to resubmit. However, you should not discuss with any of the buyers’ agents particulars of any of the other offers. Similar to when the offers were first received, the resubmitted offers should all be submitted to the sellers as they are received by the agent, and the sellers can choose which offer to work, or they can reject them all again.
Basic real estate law requires that several steps be followed in order to have an executed contract. First, an offer must be made by a buyer, then the seller can accept the offer or change some of the terms of the buyer’s offer, thereby creating a counter-offer. If the seller simply accepts the buyer’s first offer, then the seller must sign the offer and send it back to the buyer. If the seller makes a counter-offer, the written counter also needs to be sent back to the buyer to accept or to make yet another counter-offer. Once the counters end and an agreement is signed, the final step to create a contract is to make sure the last party agreeing to the contract sends it back to the other party signaling an acceptance. It is usually that last step that causes a problem.
Occasionally, usually after a house sits on the market longer than expected, suddenly several offers hit at once. After frenzied negotiations, a deal is finally reached with a buyer. The listing agent has already told the buyer’s agent the seller has agreed to the buyer’s last counter-offer and is getting the seller to sign and will send the contract back as soon as it is signed. This conversation usually happens by phone or by text. The listing agent heads to the seller’s house and on the way receives another offer by email with better terms. Or, that new offer is received as the seller is signing the counter-offer. Or, the new offer is received after the counter-offer is signed, but before it is delivered back to the buyer. The new offer should be given to the seller because no contract has been completed under any of these scenarios. If the seller decides to work the second offer, then the listing agent should immediately send to the first buyer’s agent a written rejection of the counter-offer signed by the seller. The second offer should not be addressed until the first is properly rejected, and that must be in writing by the seller.
Agents must remember only the parties can create a contract. Calling or texting the other agent that your clients have agreed to the other parties’ terms does not form a contract. Similarly, an agent’s call or text that the offer or counter is rejected is not a valid rejection. In the days of electronic communication, it should be relatively easy to get your clients’ signatures on a written offer or rejection. Otherwise, your clients might find themselves without enforceable contract or, worse, with two enforceable contracts.
This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Claims examples are for illustrative purposes only. Read your policy for a complete description of what is covered and excluded.
Read about the new iPhone iOS 13 per @InmanNews https://t.co/R27UAYtfG7RT @InmanNews: Feature that prompts social network users to reconsider posting potentially offensive comments grew out of effort to combat…