Too often, the WRA Legal Hotline receives calls about presentation of offers, or more accurately, the perception that the buyer’s offer was not presented. This article focuses on the standards set forth in Wisconsin law and the REALTOR® Code of Ethics as they relate to lawful and professional ways to present offers and communicate with consumers. Good communication is one of the best ways to avoid an allegation of less-than-perfect or less-than-professional conduct. Lack of professionalism in the presentation of offers, documentation of presentation and communication between firms can create misunderstandings and further miscommunication between brokers as well as consumers.
The questions and answers that follow are in context of this backstory, which is all too familiar to the hotline attorneys. The cooperating agent submitted the buyer’s written offer to the listing agent. The binding acceptance deadline passed, and there has been no response from the listing agent about the offer. The buyer is demanding to know what the seller thought of the buyer’s offer, and the buyer wants to know why the property is no longer available. The cooperating agent asks for evidence of presentation, and the listing agent refused to provide information.
What are the rules about presentation of offers for the listing broker?
The listing agent is required to present all offers in a timely manner unless the presentation is contrary to the seller’s instructions.
Wis. Admin. Code § REEB 24.13(2)(b) states:
Licensees shall present promptly all written proposals received to the licensee’s client or customer. Licensees shall not withhold any written proposals from presentation pending the party’s action on a written proposal previously presented.
Further 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.
What if the seller does not reject the offer in writing?
While licensees are obligated to follow Wisconsin license law for presentation, keep in mind the listing agent can never require the seller to sign a document acknowledging the seller’s rejection. Therefore, an agent working with a buyer can request a statement that indicates when the offer was presented. The easiest way for the listing agent to provide such a statement is to provide a copy of the offer to purchase that includes a presentation date and time on the last few lines of the form.
If the seller refuses to initial the offer as rejected, the listing agent is required to provide the buyer with a written statement documenting the date and time when the offer was rejected or that it expired without acceptance. If the listing agent is not responsive to the buyer’s or the cooperating agent’s request for such a statement, the agent may remind the listing agent, or the broker of the listing firm, about the requirements of Wis. Admin. Code § REEB 24.13(4).
In addition, the cooperating agent may contact the broker or manager of the listing agent to make the request. If there is still no response, the buyer may consider filing a complaint with the Wisconsin Department of Safety and Professional Services. Information for filing complaints is available here.
Does the REALTOR® Code of Ethics address not presenting an offer?
The REALTOR® Code of Ethics also addresses the services provided by a REALTOR® in a transaction.
REALTOR® Code of Ethics Article 1
When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve REALTORS® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, REALTORS® remain obligated to treat all parties honestly. (Amended 1/01)
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 is the status of the offer after the binding acceptance deadline passes?
No response means “no.” The cooperating agent and the buyer should keep in mind the seller is not required to counter the buyer’s offer to purchase. An offer will expire by the passage of time if the seller does not accept and deliver the accepted offer by the binding acceptance deadline. A buyer wishing to continue negotiations may initiate a new offer to purchase or provide a counter-offer to the original offer.
The buyer’s counter-offer may be drafted at any time, even after the original date for binding acceptance. Although generally there is a buyer’s offer, seller’s counter #1 and a buyer’s counter #2 in real estate negotiations, like a tennis match, there is nothing that says a buyer cannot counter his or her own offer. The pattern may follow a buyer’s offer, buyer’s counter #1, buyer’s counter #2, and so on.
If the cooperating agent thinks the offer was not presented, can the cooperating agent go to the seller directly?
Generally, no. The administrative code rules and the REALTOR® Code of Ethics 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.
Likewise, Article 16 of the REALTOR® Code of Ethics indicates that 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 fleshes out this concept stating, “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 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” is not further defined, and in many cases, whether to contact the seller directly comes down to a judgment call by the agent in conjunction with his or her supervising broker.
In analyzing the potential ethical violation or violation of the administrative code, the agent must consider why he or she is reasonably compelled to attempt direct negotiation with the seller. For example, the agent should ask why the listing agent did not present offers or is not available. If the cooperating agent decides to contact the seller directly, the agent is risking a possible claim of an ethics violation or a violation of the administrative code.
An alternate approach would be to send a copy of the offer and any counter-offers to the listing firm and a carbon copy to the seller. A cover letter to the seller would acknowledge the seller’s relationship with the listing firm and refer the seller to his or her respective broker to continue negotiations.
REALTOR® association dispute resolution
What other options are there to open the lines of communication with a nonresponsive listing agent?
If a cooperating agent or buyer is interested in dispute resolution, the agent may reach out to the local REALTOR® association to request ombudsman or mediation services regarding the concerns. NAR describes the ombudsman process as follows:
More information is available here.
The ombudsman process can be beneficial for both consumers and REALTOR® members who need an immediate, informal resolution to common misunderstandings. For example, ombudsmen can field and respond to a wide variety of inquiries and complaints, including general questions about real estate practice, transaction details, ethical practice and enforcement issues. Ombudsmen can also receive and respond to questions and complaints about members, can contact members to inform them that a client or customer has raised a question or issue, and can contact members to obtain information necessary to provide an informed response.