Can a Real Estate Agent Disclose Offers to Other Buyers

The fear of missing out on a dream property can have buyers overbidding, especially when they hear the four-word phrase that is anxiety-inducing and panic-elevating: we have other offers.

According to the National Association of Realtors, February 2022 saw 48% of buyers make offers significantly above the asking price. The association’s data went a step further, revealing that these offers trodden around $10,000 above the listing price. Perhaps if you and your client knew about the other offers, you’d bid better. But is that legal? Can a real estate agent disclose offers to other buyers?

It depends on the seller and state laws. As a real estate agent, your duty is to your client. If the seller asks the listing agent to not reveal offers, then the agent cannot disclose any information about other offers on the table.

The second layer is all legal. If a potential buyer who has put an offer on the table has signed a confidentiality agreement with the seller, the agent is legally bound to not disclose information concerning their bid.

Today, we’ll journey into the perimeters of disclosure afforded real estate agents. We will explore both the ethical and legal perspectives of it. By reading through, you’ll gain valuable insights that could greatly influence your bidding strategy or client advice in future dealings. So let’s solve this mystery.

Listing Agent’s Duty to their Client

A real estate agent’s primary responsibility, whether a listing or buyer’s agent, is to safeguard their client’s interests. This fiduciary duty remains a core pillar in our industry.

Its importance is even more undeniable when a seller’s property attracts multiple offers. In such scenarios, it’s the agent’s job to ensure that their clients secure the best deal possible.

However, when it comes to offer disclosures or revealing details about offers made on the property, real estate agents have no clear-cut state laws mandating or forbidding this practice.

Instead, guidance on this issue often comes from industry bodies like the National Association of Realtors (NAR). According to NAR regulations, agents must obtain explicit permission from sellers before disclosing any information about an offer received.

The direct section can be found in Article 1 of Standard Practice 1-15, which all realtors must adhere to.

This rule underscores another key aspect of an agent’s role: respecting their clients’ wishes. If a seller prefers not to disclose any offer-related details, then an agent cannot and should not reveal these specifics.

Given the complexity around disclosures, savvy agents will engage with their clients early in the process. They’ll discuss whether or not they wish for any offers received on their property to be disclosed publicly or kept confidential.

Listing Agent’s Duty to the Buyer

While the primary responsibility of a real estate agent is to their client, it’s important to understand that they also have a duty towards the buyer and their respective agent. This obligation, however diverse in nature compared to their principal commitment, exists within an ethical framework designed for fairness and transparency in property transactions.

One key aspect of this duty involves keeping buyers informed of any offers on the table,  particularly when asked. It doesn’t give agents the leeway to disclose amounts or names of the potential buyer. It just lets them know there is a little competition.

In other words, if there are proposals made by potential purchasers on a property you’re interested in buying, the seller’s agent should let you know.

This delicate balance ensures both parties remain privy to crucial information without breaching confidentiality or unfairly tipping scales in favor of one party. 

An Ethics Debate

“We already have several offers on the property” is one of those phrases that frequently stirs a great deal of skepticism among potential buyers. Many regard this as an ethically dubious tactic used by real estate agents to push them into making higher bids for properties.

It’s not hard to see why. The more money a property fetches, the larger the commission reaped by the agent.

This practice has given rise to what can be termed an ‘ethics debate.’ On one hand, it’s understandable that agents would want to maximize their earnings. After all, they are in business like everyone else.

Through this tactic, agents still serve their clients, ensuring they get the best deal possible. But on the other hand, such tactics can feel predatory and manipulative from a buyer’s perspective.

Let’s consider an example: Imagine you’re at an auction bidding on a beautiful piece of artwork. You’ve set your limit and are ready to make your bid when suddenly, the auctioneer announces there are multiple interested parties.

Suddenly you’re questioning whether you should go beyond your initial budget or risk losing out entirely. All the while, there is a potential the information is false and designed only to drive up prices.

In real estate transactions too, similar situations arise where buyers are told about other offers which may or may not exist only with intentions of hiking up their own offer price.

However, honesty should always be paramount in every transaction. This isn’t merely good advice; it’s mandated by professional conduct standards such as those outlined in the National Association of Realtors’s (NAR) Code of Ethics.
 
The NAR’s Code emphasizes truthfulness in service and insists that they not mislead or withhold important details during negotiations or transactions, including information about other offers.

Therefore while competition is healthy and naturally drives market values upwards, manipulation under its guise undermines trust and integrity within this industry.

To Tell or Not to Tell

The question of whether a real estate agent can disclose offers to other buyers is not black and white. It’s a complex issue that depends on various factors, such as the wishes of the seller, state laws, ethical guidelines by industry bodies, and confidentiality agreements.

As an agent, it is crucial to understand these dynamics to navigate the space effectively. For agents, respecting client’s wishes and maintaining transparency are key.

Next Steps:

Wondering what the way forward is?

1. If you’re the listing agent: Have early discussions with your clients regarding their preference for offer disclosures. Always respect their decision while ensuring transparency with potential buyers within permissible limits.
2. If you’re the buyer’s agent: Don’t hesitate to ask if there are other bids on a property but remember that specific details may be confidential unless otherwise stated by the seller.

We’d love to hear your thoughts or experiences related to this topic! Feel free to share them in the comments section below or reach out directly if you need further guidance on navigating through property negotiations effectively.