Disclosing Accepted Offer to Other Brokers

Dear Shannon:  I’m a seasoned broker, and I listed an office building for sale for a demanding seller and quickly found a buyer who submitted an offer, contingent on the sale of buyer’s current office building. The seller asked me to continue marketing the property, hoping a better offer might come along (maybe one without a contingency). Days later, another broker contacted me to set up a showing to an out-of-town buyer. They said it looks like a perfect building and location for their client’s business. I scheduled the showing for that weekend and didn’t say anything about the previously accepted purchase offer.

After seeing the property with their client, the other broker sent me a purchase offer. I told my seller about the second offer, and they asked me to tell the original buyer about it. The original buyer then waived their contingency. I told the other broker that the seller intends to close on a previously accepted contract now that the ‘sales contingency’ has been removed. 

The other broker is upset that I didn’t tell them about the previously accepted offer and filed a complaint against me.  What did I do wrong? I continued to market the property and didn’t make other brokers aware the property was under contract in order to promote the interest of my seller by continuing to attract buyers.  How is promoting the interest of my seller a violation of the Code of Ethics? Surprised

Dear Surprised: Thank you for reaching out on this. I hear that you were promoting the interest of your seller at the seller’s instructions but it sounds like you missed an important obligation under the Code. Let’s unpack the rules here, starting with the section of the Code that requires you to disclose the accepted offer to other brokers. Then we’ll address your point on promoting the interests of your seller and where you may have misunderstood the Code.

First, let’s find the Article that deals with cooperating with other brokers:

Article 3 states: Realtors® shall cooperate with other brokers except when cooperation is not in the client’s best interest. The obligation to cooperate does not include the obligation to share commissions, fees, or to otherwise compensate another broker. (Amended 1/95)(emphasis added)

Article 3 requires you to cooperate with other brokers except when cooperation is not in your seller’s best interest. What does cooperation mean here, exactly?  Let’s try to find a Standards of Practice (SOP) that might be applicable to your situation to help interpret what exactly Article 3 means:

SOP 3-6 says: Realtors® shall disclose the existence of accepted offers, including offers with unresolved contingencies, to any broker seeking cooperation. (Adopted 5/86, Amended 1/04)(emphasis added)

SOP 3-6 is directly applicable to your situation. Your seller previously accepted another offer, but you were trying to promote the interests of your seller by continuing to attract buyers, which you did.  Another broker reached out with an interested buyer, and SOP 3-6 requires you to disclose the existence of the previously accepted offer to the other broker, which you didn’t. The other broker submitted an offer from their buyer without being made aware of the previously accepted offer with contingencies. The other broker’s buyer’s offer was then used as leverage with the first buyer who waived their contingency to sell their current office building, all of which benefited your seller. But you were not honest with the other broker and that’s the issue.

Let’s take a look at the section of the Code referring to promoting the interest of clients:

Article 1 states: 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) (emphasis added)

Article 1 makes it clear that your obligation to promote the interests of your seller does not relieve you of your obligation to disclose the existence of previously accepted offers. You promoted the interests of your seller in ways that benefited your seller. However, you were not honest with all parties, and this is a violation of Article 3. Article 1 is not a higher priority than Article 3. Your obligation to promote your seller’s interests doesn’t control or override obligations under Article 3 as interpreted by SOP 3-6. Treating all parties honestly is an obligation under the code and not disclosing the existence of the previously accepted offer to the other broker was a violation, even though it benefitted your seller. In conclusion, you should continue to promote the interests of your clients but also don’t forget to treat all parties honestly.

Inspired by Commercial COE Article 3: Case Study #2. Other laws and rules apply.

Shannon Allen is an attorney and Florida Realtors Director of Local Association Services

Note: Advice deemed accurate on date of publication

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