Realtor Code of Ethics: Multiple Offer Situations in Ohio

When multiple offers on a property come into play, understanding your rights and responsibilities can make a significant difference in the outcome. This guide provides essential insights for buyers, sellers, and real estate professionals on navigating these complex scenarios under Ohio law and NAR ethics.

Disclosure of Multiple Offers

Q: If multiple offers are received, is there a requirement to notify all parties involved? 

A: Ohio law does not mandate the disclosure of multiple offers to buyers or their agents. However, it’s often considered good practice because it can encourage higher bids, fostering a competitive environment that benefits the seller. However, disclosing multiple offers can also lead buyers to back out to avoid a bidding war. Sellers and their agents should carefully evaluate the potential benefits against the risk of losing buyers. This decision should be made with the seller’s informed consent after discussing the possible outcomes.

Ethical Considerations According to NAR

The NAR’s Code of Ethics, specifically Standard of Practice 1-15, stipulates that the presence of other offers can only be disclosed with the seller’s permission. If consent is given, and if queried, the listing agent must also indicate whether the competing offers were from within the same brokerage or from other cooperating agents.

Scenarios to Consider in Multiple Offers

1. Verbal Acceptance: If a seller verbally accepts an offer during a phone conversation but hasn’t signed the offer, it is not legally binding. The seller can accept another offer that comes in before the first is formalized in writing.
2. During Ongoing Negotiations: If ongoing negotiations are interrupted by a higher offer, the listing agent is not obligated to inform the first buyer unless the seller instructs otherwise. This keeps the negotiation process flexible and under the seller’s control.
3. Pending Additional Offers: If an agent knows of a forthcoming offer, they must still present the first received offer promptly. It’s the seller’s decision to wait for additional offers based on the advice provided by their agent, who should be mindful of offer expiration times.
4. Issuing Multiple Counteroffers: Sellers can legally make counteroffers to more than one buyer, but this approach is risky as it could result in binding agreements with more than one buyer if all counteroffers are accepted.
5. After Acceptance: Once a seller signs an offer and communicates this acceptance to the buyer, a binding contract is formed. Even if another, higher offer is received shortly after, the seller is bound to the first contract unless it fails to close.

Taking Action

For all parties involved—whether you are buying, selling, or representing someone in a real estate transaction—understanding the nuances of multiple offer situations enhances your ability to navigate these scenarios effectively. Transparency, informed consent, and timely communication are key to managing expectations and responsibilities in multiple offer environments. For more detailed information, click here.