Vol 6 No. 37 - June 7, 2006

Your offer might not remain a secret

By Louise Bolger

There aren’t too many secrets left in the world. Twenty-four, seven you can log on to any one of a dozen Internet search engines and come up with information about your long lost cousin or next door neighbor.

Despite specific rules governing offers and acceptance, real estate transactions have always existed in a gray area of confidentiality. That gray area became even fuzzier this year when the National Association of Realtors changed its code of ethics relating to disclosure of offers on properties.

Effective Jan. 1 of this year, agents representing buyers in all member states of the National Association of Realtors, including Florida, are required to inform clients that their offers might not be kept confidential. If there are multiple offers on a property and that day will come again, the seller may now authorize his agent to disclose the existing offers to other agents. The exact wording of this from the National Association of Realtors’ Code of Ethics and Standards of Practice is:

"Realtors, in response to inquiries from buyers or cooperating brokers shall, with the sellers’ approval disclose the existence of offers on the property. Where disclosure is authorized, Realtors shall also disclose whether offers were obtained by the listing licensee, another licensee in the listing firm, or by a cooperating broker."

Previously, the gold standard for realtors was to only offer verification that another offer was being considered, without giving any details and to encourage the buyer to make an offer, since all offers must be presented to the seller.

This new standard of practice will make some realtors uncomfortable with the ethics of disclosing offers, however, some will undoubtedly view it as just another part of marketing the property. The name of the game is selling the property. If "shopping offers" works, is not illegal and is now not considered unethical, why not use it as another marketing tool?

The decision on keeping offers confidential is, of course, entirely up to the seller. This is a conclusion that should be reached after a discussion with the seller’s realtor about the pros and cons of confidentiality and, more importantly, the seller’s personal ethics.

The disclosure of an offer to a potential buyer and his agent can easily backfire. A buyer never likes to feel he is up against a wall and might become so angry that he withdraws his offer. Or he might not even make an offer, feeling that he could not meet or exceed the existing offer, leaving the seller with no offers if the first one doesn’t work out. In addition, by disclosing the offers in hand, a seller may actually be tipping his hand as to what he would accept or his bottom line.

It may sound exciting to divulge to a buyer that you already have a full price offer and ask him to do better, but the reality may not be that thrilling. Selling your home is essentially a business and should be conducted by using fair and sensible business practices.

In today’s Internet-obsessed world, there are precious few ways to keep a secret. Maybe some things are just not meant to be disclosed.

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