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Avoid Double Contracting In a Seller’s Real Estate Market

Double Contracting

According to a recent article in the LA Times, the California real estate market is poised for a strong market. This is good news for those who are thinking of selling their property this year.

The return of a strong real estate market will certainly be applauded by most real estate agents as well. After a long lull in the market, a bullish summer market will be a nice, and hopefully profitable change of pace.

However, with the return of the market, there will be a resurgence of multiple offers, and this can create situations where double contracting might occur.

Does double contracting really happen?

I recently spoke with one of the attorneys at ClaimShield risk management, and he advised me that they frequently get calls from real estate agents who have inadvertently set in motion a double contracting scenario. Don’t laugh too quickly, this could happen to you too.

The reality is that the fast-paced nature of modern communication has increased the likelihood of executing two contracts. This leads us to a basic rule … only work one offer at a time.

As you prepare your real estate agency to take advantage of this uptick in the real estate market, take some time to think about your processes so you can avoid the appearance of accepting two separate offers.

All offers must be given to the seller

You may be under the false impression that you need to give only one offer to your client at a time. This is not the case. And you certainly don’t want to filter the offers and share only offers you believe are best. (This may sound absurd to some … but it happens).

It is the duty of the real estate agent to give all offers to the seller as soon as it is received.

When the offers are properly presented to the client, then the real estate agent can review the offers and discuss the differences and provide consultation. The seller ultimately must decide, however, which offers they want to work on.

It’s totally their call.

While it’s true, the buyer may think that the seller is obligated to work the offers in some chronological order, that’s not the case. The seller can work them in any order they please. They may, in fact, choose not to work a particular offer at all.

It is not uncommon for a seller to refuse to work any offers presented as they hedge for a better deal. In this case, the real estate agent may choose to reject all offers and invite potential buyers to re-submit their “best” offer. In cases such as these, it is best if the real estate agent avoids discussing the particulars of competing offers with any of the buyer’s agents.

Just like when receiving offers for the first time, these re-submitted offers should be presented to the seller as they are received.

Contacting’s basic rules and multiple offers

You don’t have to be a lawyer to understand the basic principles of real estate law, and contracting requires several steps … offer, counter-offer, and acceptance.

When the counter-offers end and an agreement is signed, the last step is to get the last signing party to return the executed agreement to the other party. It’s during these final steps that issues occur.

On occasion, and it may be the result of frenzied negotiations, a deal is finally reached with a buyer. In fact, the listing agent may have already advised the buyer’s agent the seller has agreed to the last counter-offer. This conversation usually happens by phone or by text.

At this point, you are simply waiting on the seller to sign and return the contract.

During this waiting period, should the listing agent receive another offer with better terms, before the counter-offer is either signed or returned, a possible pending double contracting scenario is looming?

To prevent any issues, the seller’s agent should promptly give the new offer to the seller, as no contract has been executed. If the seller elects to pursue the new offer, then the listing agent should immediately send to the first buyer’s agent a written rejection of the counter-offer … signed by the seller.

It is important to note, and consistent with the first basic rule above, only work one offer at a time, the second offer should not be addressed until the first is properly rejected in writing.

The bottom line

Real estate agents know, but it bears reminding, only the parties can execute the contract. Calling or texting the other agent that your client has agreed to the terms does not form a contract, nor is it a valid rejection of a contract.

Electronic means of communication are with us for good, they are likely only going to become more of an integral part of all transactions. So use them wisely, because they can actually assist you in delivering the written, signed forms quickly. If you follow the basic rule and tips provided here, you can avoid double contracting scenarios.

This will make you, your real estate agent E&O insurance carrier, clients, and your insurance agent all much happier.

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