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
973-992-6363 ext 116 office
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.
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?
" 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).
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 BUYERâ€™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 BUYERâ€™s Agent will not disclose to any other potential BUYER the terms of BUYERâ€™s offer or any other confidential information concerning BUYER and also will not disclose to BUYER the terms of any other BUYERâ€™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.
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.
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.
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?
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.
That was you have done the right thing and have divided your loyalty in the right way.