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Multiple Offer Situations
Multiple offer situations raise many issues for listing agents. Listing agents should have a conversation and come to a written agreement with their client at the time of the listing about how to handle multiple offer situations, including protocols for:
- Presentation of offers
- Escalation clauses
- Disclosing the existence and/or terms of offers to another buyer’s agent
- Buyer love letters
- Handling rejected offers
Below are our tips for handling these issues. These are only tips. There is no “perfect” approach.
As circumstances change over the course of the transaction, the listing agent should revisit this conversation with their seller to ensure that the agreement still represents the seller’s wishes.
Present Multiple Offers First in a Spreadsheet without Buyers’ Personal Information
Seller and listing agent should agree upfront that in a multiple offer situation, offers will initially be presented in a spreadsheet that includes the price and terms of the offers, without information related to the identity of the buyer, and seller will select the best offer by marking their choice on the spreadsheet based on these objective criteria. Then, true copies of the offers will be submitted to seller. The spreadsheet should be saved in the agent’s records.
Respond to Escalation Clause with Counteroffer or Reject all Offers and Ask for Highest and Best
Escalation clauses are not prohibited by law but they do create potential problems for contract formation. They also can backfire on buyers by informing the Seller of the maximum amount the Buyer is willing to pay. Sellers must respond appropriately to escalation clauses to ensure they do not accept an offer without a definitive price term, which could result in an unenforceable agreement. Sellers and their listing agents should respond to escalation clauses either by countering the escalation clause offer at a specific price term, or by rejecting all offers and asking for new offers from all buyers at the buyers’ highest and best price and terms.
With Seller’s Permission, Disclose Existence of Other Offers. REALTORS® are required by the Code of Ethics to disclose the existence of other offers on the property in response to inquiries from cooperating brokers, with seller’s permission. Oregon real estate licensees are not prohibited from disclosing the price and terms, or a redacted copy of, another buyer’s offer in order to meet the terms of an escalation clause. However, if licensees follow the tips above on escalation clauses, they likely will not have to do so.
Do Not Accept Buyer Love Letters. Communicate this in the MLS Listing. Seller and listing agent should agree upfront NOT to accept buyer love letters and communicate this in the MLS listing. By referring to personal information unrelated to the price and terms of the offer, love letters could implicate fair housing laws, and they will be prohibited beginning January 1, 2022.
Submit All Offers. Maintain a Written Record. Provide it to Buyers. Oregon real estate licensees are required by Oregon law to submit all written offers without regard to whether the property is already under contract, to maintain a written record of the date and time each written offer was submitted and of the seller’s response, and to provide evidence to the offeror of the submittal and the response. Sellers and listing agents should agree upfront that seller will initial all pages of the offer and sign the rejection on the last page of all rejected offers, and the listing agent should provide a copy of the rejected offer to the buyer.If seller will not do this, the licensee still should provide to the buyer a written record of the date and time they presented the offer and the seller’s response.
For more tips on dealing with multiple offers, visit our Risk Management Toolkit, check out NAR’s webpage on multiple offer situations, and see relevant authority including ORS 696.805/810 (agent duties), OAR 863-015-0135 (presentation of offers), & COE Article 1, S.O.P. 1-6, 1-7, 1-8 & 1-15.