Three offers, a cousin and an in-house buyer
Emma at Green Door Realty is running a deadline sale closing Thursday at 5pm. By 4.30pm she has three offers. Offer A is $910,000 with a 10-day finance condition from a buyer represented by Emma's colleague at the same agency. Offer B is $900,000 cash unconditional from Emma's cousin. Offer C is $895,000 with a 5-day due diligence condition from a buyer who has not seen the LIM. The vendor says, 'Just tell me the top number and I'll take the cash one - don't bother showing me the others.' Emma knows her cousin is flexible on settlement and wants the property badly. She has not told the vendor about the family relationship. The agency has a written in-house policy but the vendor has not signed a consent to the agency acting for both sides.
1. What are Emma's multi-offer obligations, and why can she not simply tell the vendor the top number?
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Emma must follow the multi-offer process, not just act as a messenger for the top number:
- Tell all parties in writing that there is a multi-offer situation. Rule 13 requires each party to be informed that more than one offer has been made and that the vendor may choose any offer.
- Present every offer to the vendor, even if the vendor says not to bother. The vendor cannot make an informed decision without seeing the conditions, settlement dates, and finance/due diligence risks.
- Do not disclose one offer's confidential terms to another party without authority.
- Obtain the vendor's written decision. If the vendor refuses to see the other offers, record that instruction in writing and explain the risks.
Emma should prepare a written summary of the three offers, including price, conditions, deposit, settlement, and buyer position, and present it to the vendor. She should not simply say '$910,000 is the top number'.
2. What conflicts of interest exist, and how must Emma and the agency manage them?
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Emma has two conflicts:
- Family relationship. Offer B is from her cousin. She must disclose this to the vendor in writing before any recommendation or negotiation. Because the cousin 'wants it badly', Emma should not act as the negotiator for that offer; another salesperson or manager should handle it.
- In-house buyer. Offer A is from a buyer represented by Emma's colleague at the same agency. The agency is acting for the vendor and, through the colleague, for the buyer. That is an in-house transaction. The agency needs informed written consent from the vendor and the buyer, and must explain the limits of the agency's role. The unsigned in-house policy is not enough.
Emma should also consider whether she can remain objective. If not, she should refer the whole matter to the branch manager. Disclosure must come before the vendor chooses, not after.
3. The vendor instructs Emma not to show the other offers. What should Emma do?
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The vendor's instruction not to see the other offers does not remove Emma's duty to present them. She should:
- Explain that the offers have different conditions - cash unconditional, finance, and due diligence - and that price is not the only risk.
- Provide a written summary of all three offers even if the vendor declines to read it.
- Ask the vendor to confirm in writing that they have seen the summary and are choosing Offer B.
- Disclose the cousin relationship and the in-house position before the decision is recorded.
- Notify the unsuccessful parties in writing that their offers were not accepted, without disclosing confidential details.
If the vendor still refuses, Emma should record the advice given and escalate to the branch manager. She should not let her cousin's offer proceed without the conflict being managed.