Question about ethics / conflict of interest

Asked by Wbrogers, USA, Mobile, AL Mon Feb 13, 2012

I recently placed a bid on a HUD home and later found out that the same agent also placed a bid for another buyer, who outbid mine by a very small amount. This seems to me like a conflict of interest, and I was wondering if the agent had a duty to disclose this to me?

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7
Don Tepper, Agent, Burke, VA
Tue Feb 14, 2012
No conflict of interest from the facts you've presented. It's OK for an agent to represent two different potential buyers. However, ethically the agent cannot share the details of one offer to the other buyer. In your case, if--let's say--the house was priced at $100,000 and you offered $101,000 and the other buyer--independently--offered $102,000, then there's no conflict.

If, however, the agent had told the second buyer, "I've already got an offer for $101,000. If you want the property, submit a higher offer," that would be an ethics violation.

If the seller permits it, though, a listing agent can reveal to a buyer that another offer, or offers, have been submitted. So, in your case, if HUD permitted it, the listing agent could have said to the other potential buyer: "Yes, an offer has been submitted on the property."

Does your agent have a duty to disclose to you that he/she is representing a competing buyer? Not that I'm aware of. You certainly can ask.

Isaac points another thing to consider: Dual Agency. That complicates matters even more. It doesn't mean that anything unethical will occur, but it does mean that you may not receive the same level of service that you would if dual agency didn't exist.

In the future, make sure you have your own agent, just representing you.

Here's a link to the Code of Ethics of the National Association of Realtors: http://www.realtor.org/mempolweb.nsf/pages/code

Hope that helps.
0 votes
, ,
Tue Feb 14, 2012
It sounds suspicious because of the small increment above your offer. But how do you know which offer was first? How do you know there was another offer? It is stories like this that support my belief you should have a close working relationship with a Realtor you trust.
0 votes
Suzanne MacD…, Agent, Succasunna, NJ
Tue Feb 14, 2012
Real estate professionals owe their clients six fiduciary duties, they are:

Obedience - as long as it is not illegal or unethical, we must do what our clients tell us to do, even if we think it's a bad idea.

Loyalty - sort of speaks for itself

Disclosure - we must disclose to you all material information, what the seller says in our presence, property condition, etc.

Confidentiality - we must keep confidential all material information disclosed to us by our clients unless doing so would violate the law or another ethical duty.

Accounting - we must account fully for any monies involved in the transaction.

Reasonable care - we have to do a good job and put your interests above our own.

We owe all other parties to the transaction the duty of fair dealing, so we have to deal with them honestly and fairly.

It appears as though your agent was representing two different buyers who were bidding on the same home. The conflict you see is between their duty to YOU to disclose material information and their duty to the OTHER BUYER to keep material information confidential. In this case their duty of confidentiality to the other buyer trumps their duty of disclosure to you. All the agent could do is advise both of you and let both of you come to your own conclusion as to offer price. However, there was absolutely no breach of the duty to disclose here and, in fact, had the agent disclosed the information he or she would have been in violation of their duty to the other buyer to keep the information confidential.
0 votes
Roland Vinya…, Agent, Sprakers, NY
Mon Feb 13, 2012
Agents have a duty, I feel, to NOT disclose other party's bids - at least not without the seller requesting it. That turns it into an auction. There have been times when I was placed in a similar position, handling multiple offers on the same place at the same time. And I never like being in that position. I am almost sure to lose at least one of the buyers, who will be disgruntled and never want my services again. What I do is be brutally honest and tell all parties that I have others wanting to make bids. I say that I cannot reveal the substance of the bids and will ask each party to give their best offer and will then let the seller determine which suits him the best, that we all have to be guided by his wishes. I tell them that there could be a lower offer that is more attractive than a higher one with terms the owner doesn't like. Then I work with each party to get their best offer.
0 votes
Isaac Winkles, Agent, Huntsville, AL
Mon Feb 13, 2012
Yes, when a brokerage represents both sides of a transactional they must have written permission from both side, in he form of a limited consensual dual agency. Before the limited consensual dual agency is sign the brokerage represents the seller as a client and cannot advise the purchaser. Once the permission is given the agent is limited in the information they can provide. NEVER BUY FROM THE BROKERAGE ON THE SIGN, THEY REPRESENT THE SELLER.
0 votes
Wbrogers, Home Buyer, USA, Mobile, AL
Mon Feb 13, 2012
Yes, does that make a difference?
0 votes
Isaac Winkles, Agent, Huntsville, AL
Mon Feb 13, 2012
Was the agent with the listing brokerage?
0 votes
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