Conditional Offers: Right Questions, Honest Answers
| July 30, 2013
The foundation of a representation relationship with clients – buyers and sellers – is to assist them in making choices. That means advising them of their options, explaining the implications of the choices they make and asking them how they want to proceed.
So, what choices does a seller have after they have accepted a conditional offer? Should they disclose the offer, which would result in fewer showings? What about buyers? Should they view properties that are already the subject of an accepted conditional offer?
When it comes to the disclosure (or non disclosure of conditional sales), sellers agents and buyers agents have a significant role to play in advising their clients. Disclosing the existence of an accepted conditional offer will essentially mean that showings will stop or, at the very least, significantly slow down. Not disclosing a conditional offer means, at some level, showings would likely continue.
Seller agents, why don’t you start this conversation with your clients when they sign the listing agreement? Begin engaging them in conversation about the possible disclosure of conditional offers. You will be talking to them about other disclosures – material latent defects, stigma – why not make the conditional sale issue part of that conversation?
Buyers’ representatives should be asking questions – both of their buying clients and of listing agents. When you have an initial interview with a buyer, you’re going to ask them about the type of property they wish to buy, their timelines, location preferences, etc. – wouldn’t this be a good time to talk to them about the rules surrounding the reporting of conditional sales? Ask buyers if they are interested in viewing conditionally sold homes or if they would prefer to see only those homes that are not already the subject of an accepted conditional offer.
What happens then when a seller has accepted a conditional offer and does not want that offer disclosed?
If a buyer’s agent asks the seller’s agent, “Is there an accepted conditional offer on this property?” the seller’s agent cannot disclose the offer – but he or she also can’t be dishonest or misleading. The appropriate response in that case is to say, “I am unable to confirm or deny the existence of an accepted conditional offer.” A seller’s agent cannot say there isn’t an offer if, in fact, there is.
For a buyer’s agent who is trying to determine if a property is the subject of an accepted conditional offer, the “right” question to ask is, “Is this property the subject of an accepted conditional offer?” The answer from the seller’s agent will be either:
- No, it is not the subject of an accepted conditional offer (in which case the buyer client will likely want to view it); or,
- I cannot confirm or deny the existence of an accepted conditional offer (in which case the buyer may not want to see it as it appears there is an accepted conditional offer).
Asking if the property is still available isn’t really the “right” question.
In conversations with people on both sides of this debate, we’ve heard that many buyers and sellers’ representatives are acting inappropriately. So, think about this….
If as many as 60 per cent of buyer representatives aren’t asking the question and if as many as 40 per cent of seller representatives mislead those that do ask, then it’s not the rule that’s broken, it’s the practice that is broken and needs to be fixed.
To both sellers and buyers’ representatives, the earlier in the process that you engage in this conversation, the better understanding your clients will have about our market and the way it works, and the more value you add.
Do you raise this issue in your initial interview with buyers and sellers? How many of your sellers actually ask you to withhold the fact that their property is conditionally sold?