Notes from the Attorneys of the Massachusetts Association of REALTORS Legal Hotline
Q. I received an offer from a cooperating agent, my seller-client has instructed me that he only wants to see offers after the first open house which is not until this weekend. The cooperating agent has informed me that this is in violation of the law relating to real estate brokerage as well as inconsistent with the REALTOR® Code of Ethics. What should I do?
A. If the seller has instructed you to hold all offers you may hold them. Code of Massachusetts Regulations 3.00(11) (d) requires all real estate licensees to present all offers “forthwith,” however a listing broker should contact the seller as soon as he receives an offer. Standard of Practice, 1-6 of the REALTOR® Code of Ethics contains a similar provision. The seller may authorize the listing broker to wait to present all offers; however, the choice must be the seller’s. It might be a good practice to ask the seller for those instructions in writing to provide to cooperating brokers so they may inform their customers and clients.
Q. I have had a “hot” listing with a difficult seller client and I just received a full price, no contingency (cash) offer. Is the seller required to accept it? If they do not accept the offer am I entitled to a commission?
A. By simply placing a house in the multiple listing service or an advertisement in the paper, the seller does not create a unilateral contract that requires him to sell his or her property for the asking price. A full price, cash offer, therefore, does not create a contract between the seller and prospective buyer. In a seller’s market multiple full price offers can come in and the seller may wish to seek a higher price. If this is the case make sure your seller understands that if he is attempting to create a bidding war all prospective purchasers could abandon the property. For more information regarding multiple offers please see Presenting and Negotiating Multiple Offers in the 2005 edition of NAR’s Code of Ethics and Arbitration Manual.
It is unclear whether or not you are entitled to a commission simply because you secured a full price offer. Under MA law a listing broker is normally not entitled to a commission unless the property closes. A seller can agree to pay a commission through a written listing agreement where the broker finds a ready, willing and able buyer and due to the bad acts of the seller the transaction does not close.
Q: I have a buyer who wants to submit an offer before a scheduled open house tomorrow and the listing broker has said the seller only will review all offers after the open house. Can a listing broker hold all offers until the end of a weekend before presenting them? I think that the listing broker is hoping to get an in-house offer.
A: 254 Code of Massachusetts Regulations 3.00(11) (d) requires all real estate licensees to present all offers “forthwith.” A listing broker should contact the seller as soon as he receives an offer. The seller may authorize the listing broker to wait until Sunday evening to present all offers; however, the choice must be the seller’s.
Q. Can a listing broker hold all offers until the end of a weekend before presenting them? I think that the listing broker is hoping to get an in-house offer.
A. 254 Code of Massachusetts Regulations 3.00(11)(d) requires all real estate licensees to present all offers “forthwith.” A listing broker should contact the seller as soon as he receives an offer. The seller may authorize the listing broker to wait until Sunday evening to present all offers; however, the choice must be the seller’s.
Q. A buyer broker would like to submit an offer on one of our listings. We have asked her to give us the signed offer and told her we will present it forthwith as the law requires. She has informed us that she wants to be present when the offer is presented to our client and that, under the Realtor® Code of Ethics, we have an obligation to accommodate her request. Is she correct?
A. Not Exactly. The statement by the buyer broker that she is entitled to be present when you present the offer to the seller may very well be correct but it is the rules of your multiple listing service (MLS) and not the Realtor® Code of Ethics that would control in this situation. The NAR Code of Ethics has no reference to the right of cooperating brokers to be present when an offer is presented to the seller by the listing broker. Most MLSs, however, have adopted a rule from NAR’s model rules for Multiple Listing Services that states that, absent written instructions from the seller to the contrary, the cooperating broker (subagent or buyer broker) has the right to be present when the offer is presented to the seller.
The model rule goes on further to state that, if such written instructions from the seller do exist, the cooperating broker is entitled to a copy of them. It seems to me that the clear intention of this proposed rule is to ensure that co-brokes get the chance to personally see the listing broker present their customer or client’s offer to the seller. It does not mean that the co-brokes gets to “pitch” the offer themselves to the seller, nor does it mean that they are allowed to stay for a discussion of the offer by the listing broker and his client. Interestingly, there is also a model rule from NAR that has also been adopted by most MLSs that offers this same right to be present to listing brokers when seller makes a counter-offer to buyers. Realtors® with questions with regards to whether their particular MLS has adopted these provisions should review the service’s rules. If a Realtor® does not belong to an MLS then no such obligations regarding offer presentation apply except for the state requirement that all offers be presented forthwith.
Q: Can a listing broker hold all offers until the end of a weekend before presenting them? I think that the listing broker is hoping to get an in-house offer.
A: 254 Code of Massachusetts Regulations 3.00(11)(d) requires all real estate licensees to present all offers “forthwith.” A listing broker should contact the seller as soon as he receives an offer. The seller may authorize the listing broker to wait until Sunday evening to present all offers; however, the choice must be the seller’s.
Q: Is it true that a consumer who signs an offer to buy a home has three days to change his mind even if a seller has accepted the offer?
A: No. M.G.L. c. 93, s. 48 allows a consumer three business days in which to cancel an agreement for the sale or lease of goods or services in excess of $25 which are used primarily for personal, family or household purposes if the contract was signed at a place other than the seller or lessor’s office. For example, if a door-to-door salesperson convinces a consumer to sign a contract to have aluminum siding installed on his house, and the contract is signed at the consumer’s dining room table, the consumer would have three business days in which to rescind or cancel the contract. However, this statute has not been held to apply to real estate transactions since real estate is not a “good.” The reasoning behind the statute is that consumers who sign contracts in their homes are under higher pressure to do so than a person who signs a contract in a business office where he is free to leave.
Q. Must a seller accept a full-price cash offer? Does it make a difference if he verbally accepts the offer and then changes his mind and refuses to sign a written offer to purchase?
A. The answer to both questions is “no”. In order for a contract for the sale of land in Massachusetts to be enforceable, it must comply with the statute of frauds (M.G.L. chapter 259 section 1). The statute of frauds states that no action shall be brought upon a contract for the sale of real property unless it is in writing and signed by the party against whom enforcement is sought. By simply placing a house in the multiple listing service or an advertisement in the paper, the seller does not create a unilateral contract that requires him to sell his or her property for the asking price. Thus a cash offer for that amount does not create a contract between the seller and offeror. In addition, the verbal acceptance of that offer by the seller still falls short of the statute’s requirement that the contract be in writing and signed by the seller. In the above case, the terms of the contract may be in the offer from the prospective buyer but, in the absence of a signature on the offer to purchase, there is no enforceable agreement.
Q. I am a buyer’s agent. My buyer submitted an offer that stated that I was to be paid from the transaction. The seller signed the offer but crossed out this section. Can she do this?
A. Yes. Since the seller has deleted a key term of the buyer’s offer, the seller has submitted a counteroffer. The buyer may accept the counteroffer or submit his own counter to the counteroffer. Make sure to warn the buyer before he accepts the seller’s counteroffer, that he will still be obligated to pay your commission if this is what your contract requires.