Common Pitfalls in Negotiating Multiple Offers

Short Answer: 

Yes, this is permissible if authorized by the seller, unless there is a confidentiality agreement that prohibits that disclosure.  Best practice is to obtain the authorization from the seller in writing.

Analysis:

Analysis of this response under the Code of Ethics of the National Association of REALTORS® (NAR) and Louisiana law are discussed below.

Code of Ethics Considerations

REALTORS® are subject to state real estate regulation and the NAR Code of Ethics. The Code of Ethics obligates REALTORS® to be honest with all parties; to present offers and counter-offers quickly and objectively; to protect and promote the interests of their client; and to cooperate with other brokers (See NAR Code of Ethics Manual, Presenting and Negotiating Multiple Offers).   Cooperation involves sharing of relevant information.

Article 1 of the Code of Ethics imposes two obligations on licensees: first, licensees are required to “protect and promote the interests of their client,” and second, licensees are obligated “to treat all parties fairly.”  An agent is permitted to disclose the existence and source of other offers to buyers and cooperating brokers, with authorization from the seller (See NAR Code of Ethics Manual, Presenting and Negotiating Multiple Offers).   NAR Standard of Practice 1-15 provides:

REALTORS®, in response to inquiries from buyers or cooperating brokers shall, with the sellers’ approval, disclose the existence of offers on the property.  Where disclosure is authorized, REALTORS® shall also disclose [when asked] whether offers were obtained by the listing licensee, another licensee in the listing firm, or by a cooperating broker. (emphasis added)

Essentially, if authorized by the seller, terms of offers can be disclosed to competing buyers or their agents unless there are state laws or confidentiality agreements that specifically prohibit that disclosure (See http://realtormag.realtor.org/law-and-ethics/ethics/article/2012/01/what-disclose-amid-multiple-offers; see also, https://magazine.realtor/law-and-ethics/ethics/article/2018/03/staying-mum-on-multiple-offers).   Best practice is to obtain the authorization from the seller in writing.

Legal Considerations

Under Louisiana state law, we did not find any specific law addressing disclosure of offers to purchase, or requiring confidentiality of the terms of such offers.  We did not find any specific Louisiana law prohibiting a seller’s agent from inviting multiple buyers’ agents who have submitted offers to purchase to present their best offers.  Louisiana real estate law defines “confidential information” as “information obtained by a licensee from a client during the term of a brokerage agreement that was made confidential by the written request or written instruction of the client or is information the disclosure of which could materially harm the position of the client” (Louisiana Real Estate Commission Law of Agency § 3891(6)(a)).  To the extent that disclosure of the terms of multiple offers could materially harm the position of the client, such disclosure is prohibited unless authorized by the client.

The conservative view is that a licensee should make sure there exists no confidentiality agreement between the seller and a potential buyer regarding the potential buyer’s offer or its terms, and obtain authorization from the seller prior to disclosure of the existence of such an offer to a buyer.

Short Answer:

No.

Analysis:

As discussed in the previous response, unless in response to an inquiry and with  authorization of seller, the Code of Ethics does not impose an affirmative duty to disclose multiple offers.  Under NAR Standard of Practice 1-15, disclosure of multiple offers is allowed with the seller’s approval.  So, if the seller does not authorize the disclosure of multiple offers, disclosure would not be permitted.  Listing agents should discuss with their client the pros and cons disclosing the existence of multiple offers to buyers/their agents in connection with the seller’s overall negotiation sales strategy.  Additionally, if there is a confidentiality agreement in place, the parties should carefully examine the agreement’s terms to determine if disclosure is permitted.

Short Answer:

A seller should generally not counter more than one offer at a time so as to avoid entering into multiple binding contracts to sell the same property to different buyers.  

Analysis:

Generally, a contract is formed by the consent of the parties, established through offer and acceptance (La. Civil Code art. 1927).   In Louisiana, an offer that is not irrevocable may be revoked any time before it is accepted (La. Civil Code art. 1930).   Acceptance may be made orally or in writing (La. Civil Code art. 1927). 

When a seller lists a property for sale, typically that listing is an "offer to the world at large."  An offer to the world at large may be accepted by anyone.  If a buyer accepts the offer with no contingencies (i.e.: agrees to pay the listing price for the property), then that buyer's acceptance of the offer will generally form a contract.  A seller generally cannot revoke the offer to the world once it has been accepted.  

In the situation of a seller receiving multiple offers from multiple buyers, a seller should carefully consider when and how to respond in order to avoid entering into more than one binding contract to sell the property.  To the extent that a buyer accepts a listing price, with no contingencies or counter-offers, the buyer and seller may have entered into a valid contract.  It is important to remember that the existence of a valid contract is highly fact specific, and it is recommended the parties consult with an attorney to determine whether a valid contract exists between the parties.

Short Answer: 

No.

Analysis:

In handling multiple offers, it is important to remember that “buyer love letters” may trigger fair housing concerns (See https://www.nar.realtor/videos/window-to-the-law/how-to-handle-multiple-offers).   A “buyer love letter” may include such items as letters, videos, photographs, or any other communication that accompanies an offer from a potential buyer which is meant to appeal to the seller.  A “love letter” could trigger implicit bias, possibly putting the buyer in a position to act on an offer based on a “feeling” rather than just considering the price, terms and merits of the offer.  As NAR explains, accepting an offer based on anything other than the price, terms and merits of the offer might violate fair housing laws, and real estate professionals should discourage the use and consideration of buyer love letters to reduce the risk of discrimination (See id).

NAR has published the following guidance on this topic: Buyers & Sellers Guide to Negotiating Multiple Offers.