Home Buying in 08003>Question Details

Paul Howard, Real Estate Pro in Cherry Hill, NJ

I'm a broker needing buyer input on buyer representation contract for handling 2 buyers interested in the same property. What would you want?

Asked by Paul Howard, Cherry Hill, NJ Thu Feb 25, 2010

I'm a real estate broker and have a problem that I hope potential home buyer's can help me solve. Generally I enter into an exclusive buyer agent agreement with my clients. My office does not represent sellers. That office model avoids the standard buyer/seller dual agency problem. However, potentially I could have two buyers interested in the same property. As a buyer how would you like the contract between us to read to deal with that situation: 1. If you were the first buyer to express interest in the home, 2. If you were the subsequent potential buyer to express interest.

This has never happened to me or my buyers yet but it could - especially if I decide to grow my office.

Help the community by answering this question:



The Q & A is mostly answered by agents. You'll probably get better input if you posted this mini survey in the form of a blog then email your sphere, send to your facebook friends, etc...
1 vote Thank Flag Link Thu Feb 25, 2010

I almost ran into the same problem last year. I had two different buyers interested in the same property and to add fuel to the fire -- both buyers were friends with each other and with me (one party being a relative of mine). Talk about a situation!!!!! Obviously I had to disclose to both buyers that I was representing two parties both interested in the same property (however, they knew that already because they were friends). My manager advised me at the time to perhaps pass one of the buyers off to another agent in the office to avoid any conflicts. It happened that only one of my buyers actually put an offer in writing so it worked out.

Its ironic because I just commented last week on a blog on Activerain where the blogger was writing about buyers cheating on their agents (obviously no exclusive buyer agreement signed) and looking at homes with various buyers agents. I commented but then added to it, is it any different when an agent is working with several buyers all interested in the same property? Is the agent then cheating on the buyer? hhhmmmm.....makes you wonder, doesn't it??

I'm curious to hear buyers input on this question.

Gina Chirico, Sales Associate
Prudential New Jersey Properties
973-715-1158 cell
973-992-6363 ext 116 office
1 vote Thank Flag Link Thu Feb 25, 2010
Dan, If I represent both I think I have to let both buyers know that there is a conflict that affects them or at least give them the opportunity to seek other representation. Lets assume that they both believe I am the best advocate for them. How is my advocacy affected by the fact that they both want the same property?

Gina, you are right on. In fact, it might be best if I represented neither. But as a provision in a service contract how would they want to deal with it.

0 votes Thank Flag Link Thu Feb 25, 2010

I'm back again and following the thread of answers. Basically its almost the same situation as being a disclosed dual agent. You are disclosing it but it still is what it is and it is what you are trying to avoid? You only want to represent one of them? Which one? I think you owe it to the first buyer and would have to turn the second buyer away. Is that where you are going with this? Because basically what you already have in your agreement protects the buyers and you are now looking for a straightforward way of only representing one of the buyers if more than one should occur?

0 votes Thank Flag Link Thu Feb 25, 2010
How about something like

" If I have more than one buyer who bids on the same house I will present both bids to the seller not telling either party and let the seller choose who buys"? There is no reason for a buyer to know about multiple bids. They only need to know they win, lose, or got counter offered. The court is really in the sellers court for what to do with offers.

If you do not like that. Give one client to your broker for an agreed upon split that is based only on the negotiating aspect (if they win).
0 votes Thank Flag Link Thu Feb 25, 2010
Dan, that isn't the aspect of the situation I'm talking about. When you hire a buyer's agent if you sign a buyer agent contract how do you want that agent to handle a situation where he is already representing someone else looking at similar properties. Some buyer agent contracts provide that the agent can represent both if they become interested in the same property but keep all their information confidential. Others provide that if a buyer has submitted a bid the agent will ask the second buyer interested to find someone else to represent him.

If you were my client how would you want to deal with the situation. Keep in mind that it is a rare situation for one agent to have two clients interested in the same property but it isn't just hypothetical. It has happened and will happen in the future. Hopefully not to me but my buyer agent contract has to account for the possibility.

Here is some language commonly used in a standard buyer agent contract in New Jersey:

----- "OTHER BUYERS: Other potential BUYERs may be interested in the same properties as BUYER. If such a situation arises, BUYER's AGENT will so advise BUYER. It is agreed that BUYER’s Agent may represent such other potential BUYERs whether such representation arises prior to, during, or after the termination of this agreement. In any such situation, BUYER agrees that BUYER’s Agent will not disclose to any other potential BUYER the terms of BUYER’s offer or any other confidential information concerning BUYER and also will not disclose to BUYER the terms of any other BUYER’s offer or any confidential information concerning the other BUYER(s)."------

This is the type of provision I don't like. So, I'm looking for wording that will resolve how it must be handled up front before the situation arises. Keep in mind that you could be the first buyer on the scene or the second. I could simply write a contract that allowed both buyers to terminate their contract with me and seek other representation. If I don't find a better solution that is what I may end up doing. In those cases I would agree not to invoke 'procuring cause' as a means to a commission.
0 votes Thank Flag Link Thu Feb 25, 2010
Look at the question below. It covers a multiple buying scenario.
Also, a blog about the same thing and both mention the other in them.

My preference. Cut the crap. Tell me I won or lost. Multiple bids, I can not prove it and you will not prove it (judging by the comments in the links above) I will either withdraw my bid OR reduce my price.

Just let the bids stand on their own and let the best bid win. I will negotiate with the seller alone. Nothing more is wanted or needed. If I lose that house, there are many more out there. I do not like high pressure tactics and this has been used that way in the past.
0 votes Thank Flag Link Thu Feb 25, 2010
Thanks Tom. Knowing how others have handled it is useful too. I know many agents don't use a buyer agent contract and just wing it. When I ask someone to sign a service contract though I make sure they understand the terms. In my case referring to an 'associate' would mean someone else in my company so the conflict would still exist. Even if it didn't there is a reason they chose me to begin with. I came close to having this situation a year ago and more recently I lost a client because I didn't come up with a solution as quickly as I should when he questioned the wording in my current contract. That was my fault and I need to fix it.

The agent of the consumer is the entire company after all. We all are agents of our companies. I think most agents don't get that part. And yes I understand that the argument is made that it is 'different' if it is a different agent in the company - I just don't buy it.
0 votes Thank Flag Link Thu Feb 25, 2010
I know you're looking for "Buyer" imput, but this HAS happened to me in the past. In order to avoid problem, I stayed with the "first" of my clients who asked that an Offer be prepared. As to the "second" of my clients wishing to make an Offer, they were explained the situation and referred to an associate who was able to provide them with full representation. Everyone was fully represented.
0 votes Thank Flag Link Thu Feb 25, 2010
Mary I appreciate the comment. I guess I don't see the analogy you give with the attorney. If you were to compare it to a service contract between you and your attorney that would be a different matter. A buyer agent contract with a consumer is a service contract specifying the terms of that service. One of the provisions of the contract deals with how specific situations are handled. The typical way is for representation of 2 buyers to be allowed and the terms that must be followed if it happens. Many buyers would want some sort of 'out' if this happened or they would want a way to avoid it. Before I go ahead and rewrite that section I want to know as much as I can about how buyers view it. (By the way, I do not intend to have an attorney write it for me - I'm quite capable of doing that and since I am not a corporation - I can.) I wrote the one I have now and it has been reviewed by a number of attorneys (at buyers request). Except for this section I'm happy with it the way it is - though I tweak it once in a while. I want to end up with a contract that will let me avoid the problem and still have the buyers involved fairly treated. Basically, I don't want to represent them both at the same time.
0 votes Thank Flag Link Thu Feb 25, 2010
I "get" it too. I read the details but chose to answer (as did several agents) with some insight from a Realtor point of view anyway.
I would be interested to see if buyers answer as well, but since most buyers are woefully unaware of the process, I highly suspect they wouldn't even know where to begin in telling a RE professional how to handle this situation.
It's like my attorney asking me how I want them to handle my defense. I don't know how it works so how can I answer with any authority?
0 votes Thank Flag Link Thu Feb 25, 2010
That's a good idea Jeremy - but I thought I'd give it a shot. At least it will show up in my profile when buyers search my name. :)
0 votes Thank Flag Link Thu Feb 25, 2010
Thanks Gina. I'm curious too. I hope I get SOME input from buyers. At least you 'get' that I'm not looking for agent opinions on this. Apparently some of the others are weak at reading the details. I care what my clients want since it is their problem too.
0 votes Thank Flag Link Thu Feb 25, 2010

I would highly suggest you use the contract your attorney drafted to prevent a potential lawsuit. To ask the clients (who could potentially also be a party in litigation against you) what they would want is not something I personally would take a chance on.

SInce you represent only buyers, I am assuming there is some sort of language in the contract that you could be showing the same property to several different buyers and what the implications are if you represent both buyers. If not it probably should be in there. I would verbally explain this to each potential buyer and what the ramifications could be if two or more buyers expressed interest in the same property.

Just as with dual agency, it's a precarious perch. My suggestion would be to hand off the competing buyer to another agent in your offfice. Then both of you can go over comps and help each buyer individually to come to an informed decision without the perception of lack of fiduciary duty to them., I would then have the offers presented in sealed envelopes

This is similar to when a sellers agent tells me ther are other offers on a home my client is interested in. Knowing there are other offers inplies we must then present our highest and best offer, and these types of situations are also usually presented in sealed envelopes to the seller.
0 votes Thank Flag Link Thu Feb 25, 2010
Thank you for your comments Scott but they are not helpful. I already have a contract that deals with the situation but I don't like it - though attorneys are happy with it. I don't care at this point what an attorney would say. I want to know how buyers would like to handle it. It will be their contract too.
0 votes Thank Flag Link Thu Feb 25, 2010
Just hand the second people over to your managing broker or if you are the broker, another agent in your office. That's the easy, simple answer.

That was you have done the right thing and have divided your loyalty in the right way.
Web Reference: http://usspaces.com
0 votes Thank Flag Link Thu Feb 25, 2010
Paul this is not a question you should pose to buyers but to your attorney or the board of realtors legal hotline. Your clients in this situation are your potential lawsuits of tomorrow iwhen representing 2 buyers on the same property, someone is not going to be happy and that usually leads to threats of suits. You will need both to sign an additional disclosure where they both acknowledge you are representing more than one party. Somewhere the time will come they both make offers, you know the maximimum each will offer and you cant tell mr smith what mrs jones offer is. You will need to advise them to place their highest and best offer however you will not be looking out for their interests not helping them get the house they love and have to have knowing their offer is too low and cant say anything.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Thu Feb 25, 2010
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