Like honey from the honeycomb, so indeed is a good offer written for a seller and their REALTOR®. Yes, it is a wonderful thing to see the fruits of the labour of listing and marketing a home, all the cleaning, and preparation for the seller, and then the plan comes together in the offer to purchase. It can be an emotional time for all parties involved and I think it’s valuable to point out a few key thoughts on offers and how to think about them.
Obligation situationWhen a buyer client decides to write an offer on a property, they have usually considered many variables not only related to the market and property but also related to their situation and finances. There are times when the buyer wants to write an offer with terms and prices that are different from those their REALTOR® believes will be successful. The REALTOR® must ensure they provide sound advice on the buyer’s best strategy for success, however, where the buyer insists, the REALTOR® has only two options, either prepare the offer following the buyer's lawful instructions or end the relationship. The third option of “I won’t write an offer at that price, or I refuse to add that term” is a non-option, and a violation of fiduciary duties owed to the buyer. Once a REALTOR® prepares the offer for their client, agreeing or disagreeing with the content, they will support the buyer’s decision and negotiate to the best of their ability on the buyer’s behalf.
Seller’s StruggleA seller’s REALTOR® may find themselves in a tricky spot too when it comes to offers. Although the excitement is high upon hearing an offer is being written sometimes that balloon is burst when they receive it and need to take it to their seller for discussion. The legislation is clear that ALL offers must be presented, so there is no option for a seller’s REALTOR® to say “I won’t present that stinky offer”, or “Write something better and then I’ll take it to the seller”. The seller is the only authority in the relationship and for this reason, only the seller can make those decisions upon being presented the offer. Regardless of what the REALTOR® thinks about the offer itself, they must present the offer promptly and let the seller decide what to do next.
Verbal VexationAlthough rare, there are times when a seller’s REALTOR® will receive a verbal offer. For example, during an open house, one of the interested parties says “Will the seller take $350,000? We don’t need financing and could move in quick!”. In this type of scenario the buyer is making a verbal offer, and as mentioned before ALL offers must be presented, written or verbal. With this in mind, the REALTOR® would need to contact the seller and inform them about what this person offered and let the seller determine the next steps. It should be noted that verbal offers/contracts are not enforceable under the statute of frauds, but it does not prevent the REALTOR® from their obligation to present, at the same time making their seller client aware of the dangers of this type of negotiation without fixed terms and conditions in writing.
3rd party with limited authorityThe REALTORS® role in the transaction is not as a party to the transaction. The only role the REALTOR® plays is as a third party with limited authority, and this reality keeps the seller and buyer clients in the proverbial driver’s seat throughout the transaction but also introduces a huge benefit to the transaction. Because the REALTORS® have no authority to alter the contract itself, they stand between the sometimes volatile clients, ensuring the objectives of their respective clients are represented and not clouded by the emotional fog of decision making. This allows the parties to continue the negotiations blissfully unaware of tensions or reactions of the other party and helps keep the REALTORS® focused on the best interests of their client as they take instruction from their client as the decision-maker.
Although the offer process in real estate may seem simple on the surface, the complexities, variables, and tensions run deep. REALTORS® plays a vital role in helping clients achieve their objectives in a smooth, systematic, and legal way while managing the hundreds of tasks required to get the desired result of a completed sale. If a transaction goes smoothly, it's not because it was “an easy one”, but because the transaction was managed professionally.
Provincial Practice Advisor
Bryan has many years of experience in the real estate industry including over 10 years as a former broker in the Edmonton Region.
Email: firstname.lastname@example.orgPhone: 403-209-3619