What Comprises an Offer

by MAR Staff | Oct 29, 2013
By Jeffrey D. Chute Mass REALTOR® and Instructor on Professional Conduct
 
The year 2013 marks the 100th Anniversary of the Code of Ethics and Standards of Practice of the National Association of REALTORS®. In recognition, Jeffrey Chute reviews key components.

Article 1 of Code Ethics

Article 1, Standard of practice 1-6 reads: “REALTORS® shall submit all offers and counter-offers objectively and as quickly as possible.” In addition, Massachusetts license law states that “all offers submitted to brokers or salespeople to purchase or rent real property that they have a right to sell or rent shall be conveyed forthwith to the owner of such real property.”

This requirement, however, does not preclude the seller from instructing the broker to hold all offers until a certain point for presentation. Also, this regulation has an exception if the seller instructs you not to present the offer. Sellers have the right to determine the contents of the offers they wish to see.

So what exactly comprises an ‘offer’? Must it always be in writing? Can it be verbal? According to the National Association of REALTORS®, verbal offers, although not encouraged, are not in violation of the Code, since no distinction is made between a “verbal” and “written” offer.

Enforceable Offers

However, it is important to note that in Massachusetts, all contracts for the transfer of real property be in writing to be enforceable. An “offer” is defined as a communication which gives the recipient the power to conclude a contract by accepting. Because verbal offers are not the type of  communication which can be accepted by the seller to form a binding contract, technically, the listing broker is not required to relay the offer to the seller. However, as an agent for your client, certain fiduciary duties exist. Therefore, the listing broker should advise the seller of the expectation that an offer will be forthcoming if you think the interest of the seller may be jeopardized by the failure to
communicate that information.

A good exercise to follow might be to imagine your client looking over your shoulder as you discuss whether or not to present a verbal offer. Will they be OK with whatever you decide to do? I have found that in my years of practice, I never really went wrong with jotting down the terms of a verbal offer to present to a client. After all, my client can present a counter-offer that has a term stating the buyer should put their offer in writing within a certain amount of time.

As always, the best practice is to consult with your client before the situation arises. That way, you can be sure that you and your client are on the same page when it comes to verbal offers.