[Published Mar. 25, 2015, in the Jeffco editions of the Denver Post's YourHub section. An abbreviated version also appeared in four Jefferson County weekly newspapers.]
Just because homes sell quickly with multiple offers does not mean they sell easily. It’s hard being a buyer’s agent and winning a bidding war, but it’s no easier being a listing agent guiding your seller through the process of choosing the best offer.
The term “agent” carries with it, under Colorado law, the legal obligation to represent your client with “utmost good faith, loyalty and fidelity.” The listing agent is also obligated to seek the price and terms contained in his/her listing contract with the seller.
In today’s competitive seller’s market, however, I believe that I’m obliged to seek not just the listing price, but the highest possible price through the process of competitive bidding.
I touched on this topic in my Dec. 6, 2014, column, “Negotiating Multiple Offers Can & Probably Should Resemble an Auction,” which you can read at www.JimSmithColumns.com. There is, however, disagreement among agents and brokers regarding this process.
I’ve observed that most agents subscribe to the idea that you shouldn’t reveal the terms of competing offers to agents who want to know “what it will take” for their buyers to submit the winning offer.
There is no rule — or law — against doing so. I heard attorney Oliver Frascona tell a class on contracts that it was perfectly okay to reveal the terms of competing offers to agents (or to unrepresented buyers) who are competing for your listing.
Ask yourself: Is a listing agent serving his or her seller properly if he doesn’t do, within the bounds of law and ethics, what he has to in order to obtain the best price and terms for his seller?
When I’m on the buyer side of a bidding war, I appreciate being fully informed, because I don’t want my client to lose a house he wants, especially when it sells for a price he would have exceeded if he’d only known the price he had to beat.
I certainly understand the upset of a buyer and his/her agent who thinks conducting an auction is unfair or plain wrong. Agents accustomed to blindly submitting their buyer’s “highest and best” offer without knowing their competition may feel that the seller is being greedy, but that’s not a fair criticism. A seller is entitled to get the most he can for his home, and it’s my job as his agent to make it happen.
The situation gets sticky when one of the buyers is not represented by another agent. The listing agent must keep his seller’s best interest foremost and not try unfairly or otherwise to win the contract for this buyer.
So how does an ethical and law-abiding listing agent handle that sticky situation?
For starters, he keeps in mind that the essence of an auction is full awareness by all participants of the current highest offer. It needs to be an open, fair process.
At the same time, the seller is the boss, and when the seller says to stop the bidding and take the current highest offer, then the agent must comply. The seller gets to choose the buyer — and it may not be the buyer with the highest price. It could be one that the seller likes for a variety of subjective reasons. That’s why agents often submit personal letters in which their buyers urge acceptance of their offer on very personal terms.
What’s your opinion on this topic? Let me know! (Comment below!)