You are the representative to two buyers and they both want the same house! What do you do?
Ah! In this unique real estate market these days it's not unusual for the same agent to represent to buyers over the same house. But what do you do when they both want the exact same house and you are representing both of them?
How do you handle the situation without violating any fiduciary duties to both buyers?
On April 6, a new law came into play that talks about contemporaneous offers. This is an offer that's defined as an offer to purchase or lease made by two or more clients represented by the same agent for the same property. This new license law has different requirements for handling this type of situation.
There are some of the most frequently asked questions when it comes to the contemporaneous offers.
If the offers are considered at the same time, this new law requires the agent to provide written disclosure to the buyers that you are in fact representing another buyer making an offer to purchase the same property. While this might be considered awkward, it is not illegal. The agent must disclose that they are representing to buyers for the same property before writing the second offer.
The written notice of disclosure can be in writing, email or even text but you want to make sure to document this by printing a copy for your records. If for some reason written notification is difficult verbal notice can be made but it should be documented that you provided verbal communication or notification when you can.
The agent does not need the consent of the first buyer in order to write the second offer. It only requires the agent to disclose this type of offer situation.
If the second buyer or even the first buyer is uncomfortable with the same agent writing up to offers for the same property, the agent must make a referral to another licensee. It could be the same brokerage or another brokerage, whatever the buyer is comfortable with.
If the agent does refer the buyer to another broker or licensee, the agent doesn't have to inform the first buyer that there is a second buyer. They only have to disclose that if the same agent is representing both buyers on the same house, however, it might be good fiduciary duty and representation to inform the first buyer that there could be multiple offers coming.
If the agent has two buyers interested in the same house but only one has shown interest to make an offer, there's no requirement that the agent has to inform the second buyer. The first duty is to the first buyer until the second offer is actually made.
Many agents are concerned about the confidentiality that this poses to clients. Most agents don't "disclose any other clients that are making an offer on a property but this new law creates a narrow exception to this general duty by only permitting disclosure when there are two offers on the same property from to better clients that will be considered at the same time." [Source]
The identity of the buyers does not need to be disclosed but if the buyer's agent is also the listing agent on a property, the agent needs the consent of the seller to disclose the existence of multiple offers to the buyers. This is where things get really muddy so it's important that licensees do things correctly and by the book. Because of this, brokers can adopt a policy that if the situation arises, one of the other buyers must be referred to a manager or another agent within the brokerage.
Read More: 5 Surprises Many First Time Buyers Get
Contemporaneous offers do have provisions that apply to leases as well and commercial real estate.
This is a tricky situation but in low inventory, high seller's markets, this is not uncommon. It's important to know the rules and logistics before doing something that could be illegal.
As a certified Realtor® for the top-rated Columbus Realty Firm - Vision Realty, with 32 years of dedicated real estate experience, I can help buyers, sellers, investors, short sale sellers and more find, sell or invest in the right property, at the right price, at the right time. Contact me anytime for updates and information on the Columbus OH Real Estate market.