When Selling A Property, What’s The Difference Between An Offer And An Accepted Offer, And What’s The Broker’s Responsibility To Cooperate?
Buyers and Sellers have certain misconceptions when selling and buying a home. (Photo: Nicole Barylski)
Buyers and Sellers have certain misconceptions when selling and buying a home. This article addresses some of them.
A seller receives an offer from a buyer to purchase the property. The seller accepts it. Does that meet the definition of an accepted offer? Not according to Anthony Gatto Esq., Director of Legal Services for the New York State Association of Realtors. In a recent NYSAR publication he stated: "It is my opinion that an "accepted offer" in New York is one where a document that can bind the parties to the sale is executed by both parties either with a 'wet' signature or electronically." He goes on to quote New York's Statute of Frauds regarding real estate transactions to support his opinion. (See New York's General Obligations Law).
This poses the question: What is a broker's obligation with respect to offers and accepted offers? Does a broker have to disclose to buyers and other brokers that an offer has been made on the property? Gatto wrote: "A Realtor practicing in New York is not required to disclose a verbally accepted offer unless the seller gives permission." That permission to disclose does not impose upon the seller or the broker an obligation to disclose the terms of the offer. Gatto does differentiate between offers and accepted offers with respect to disclosure. The law in New York does require a broker to disclose to buyers and cooperating brokers the existence of accepted offers, but not the terms of the agreement between seller and buyer. A broker cannot honor a seller's instructions not to disclose that there is an accepted offer.
Let's exam other issues regarding sellers, brokers, and duties to cooperate with other brokers. What if the seller informs his broker not to deal with buyers' brokers? While this attitude is not in the seller's best interests, it also violates the New York Department of State's instructions regarding a real estate broker's conduct. Once again, let's look to Gatto: " Buyers have a right to be represented by whomever they choose, and therefore, listing agents cannot obey the request of their seller to deny access to a buyer's agent." What is also true, the seller does not have to agree to pay a buyer's broker's commission although I do not consider it to be in the best interests of the seller to refuse to do so.
Another issue that deserves clarification pertains to a seller and the seller's broker's obligation to respond to offers submitted by other brokers. The broker representing the seller is obligated to submit all offers to the seller. The seller is not required to respond. Gatto advised that NYSAR does have available a form - Affirmation Request: Presentation of Purchase Offer Pursuant to Standard Practice 1-7 of the National Association of Realtors that pertains to this issue.
A final point I would like to address is when should the seller and his broker stop showing the property? I think the answer is after title passes. Until then, anything can happen. Better to have back-up offers than start all over again. I would advise that a broker not do otherwise except on the advice of the seller's attorney.
There are many scenarios that could be exceptions to situations addressed in this article. Advice of legal counsel should be sought in any given situation.
John is a St. John's University graduate, licensed Real Estate broker, DOS Certified Instructor, lecturer, teaches real estate license classes at Cook Maran Real Estate School, and is a well-respected consultant to the real estate industry. He previously taught at LIU and NYU. www.johnaviteritti.com