14 Mississippi Real Estate LEADER / Spring 2021
R
EALTORS® across the state are reporting a serious lack
of inventory and ample demand, leading to increased
possibility of multiple oers. Brokers know what a mineeld
multiple oer scenarios can present to new and inexperienced
agents. Here are some things to keep in mind:
n REALTORS® across the state are reporting a serious lack
of inventory and ample demand, leading to more multiple oer
scenarios. Brokers know what a mineeld multiple oers can
present to new and inexperienced agents. Here are some things to
keep in mind:
n e seller decides how multiple oers are going to be handled,
not the buyer. e buyer and buyer’s broker/agent can only
respond to what the seller wants to do. Sellers and buyers have
options and decisions to make. ere is no “automatic” multiple
oer situation.
n In general terms, a seller can
} Accept what they consider to be the “best” oer
} Inform potential purchasers that other oers are “on the
table”
} Choose to negotiate one oer and ignore others
} Choose to negotiate one oer and reject the others
Mississippi REALTORS® have the benet of the Seller Multiple
Oer Notication (F39) and the Multiple Oer Notication To
Buyer and Buyer’s Agent/Broker and Acknowledgment (F40)
forms that cover the basic issues in a multiple oer scenario in
accordance with the legal and ethical obligations of REALTORS®.
Ethical Obligations. REALTORS® have an ethical obligation to
continue to submit all oers and counter-oers to their respective
clients until closing; a seller may waive the listing broker’s
obligation to present all oers to them in writing. e REALTOR®
Code of Ethics also requires a listing broker, with the seller’s
approval, to respond to a cooperating broker who enquires about
the existence of oers on the property. When the seller authorizes
disclosure, the broker shall also disclose, if asked, whether oers
were obtained by the listing licensee, another licensee in the listing
rm, or by a cooperating broker. REALTORS® are required to
disclose the existence of accepted oers, including oers with
unresolved contingencies, to any broker seeking cooperation.
What about condentiality? Purchase oers are generally not
condential unless the parties have agreed in advance to keep them
condential. Absent a condentiality agreement, sellers may tell
other buyers about another buyer’s oer in an eort to get a better
oer, or instruct their broker/agent to do so. A listing broker
should receive specic authority from a seller regarding disclosure
of multiple oers. Use of standard form F39 satises this obligation.
Buyer Broker Challenges. Multiple oer scenarios involve
more than a single seller and buyer negotiating. A buyer broker
may have more than one client interested in a property. In those
situations, the buyer broker must exercise extreme caution to fulll
their duciary duties to each buyer they represent of honesty and
fair dealing, loyalty, condentiality, obedience, disclosure, full
accounting and the duty to use skill, care and diligence. is can
present possible conicts when one buyer client discloses their
willingness to negotiate things like purchase price, as with an
escalation clause, and the buyer broker has another client whose
negotiations might be impacted by the other buyer’s strategy.
Escalation clauses an option? ese vary in form, but generally
include an original oer at a base purchase price, a provision that
the oer price will increase automatically by a set amount to beat
a competing oer, and a cap beyond which the oer price will
no longer increase. Caps in escalation clauses “show the buyer’s
hand” on how much they are willing to pay, possibly giving sellers
an advantage in negotiations. Sellers are not obligated to honor
escalation clauses, and may simply counter a buyer with their
maximum price as revealed in the escalation clause. Even if no
other oers are received, a seller knows they could make a counter-
oer to at least see if the buyer will accept it in order to get the
contract. Escalation clauses pose liability threats to REALTORS®
when the seller or buyer looks to their REALTOR® to keep up with
oers and escalations, which can be confusing with so many factors
to track.
“Love letters” or “liability letters”? ough “love letters”
written by interested buyers detailing why they want a property
may motivate a seller to pick one oer over a similar competing
oer, the risks involved, particularly with possible Fair Housing
Act violations, outweigh the benet. Sellers should be warned
to consult legal counsel before accepting them, and buyers
should consult legal counsel before sending them to a seller. At
a minimum, REALTORS® should make sure clients are educated
concerning their use and possible pitfalls under fair housing laws.
NAR attorneys have suggested “liability letters” is a better name for
them. Best practice might be to refuse to participate in their use
altogether.
Irrespective of how many oers come in, only one can lead to a
sale. at means some buyers (and their agents) are not going to be
happy if their oer is not accepted. REALTORS® can help things
go more smoothly by knowing the rules and remembering that fair
and honest treatment of other parties should be the goal, along with
eective communication.
by Ron Farris
Multiple Oers: Negotiating the Mineeld
Ron Farris, Esq., is general counsel to the Mississippi
RE A LTOR S
®
, and available to members through the Legal
Hotline at 1-800-747-1103 Ext. 25. For other matters, he can
be reached at Farris Law Group, PO Box 1458, Madison, MS
39130 or by email at ron@ronfarrislawgroup.net.
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