FAQ – “I have two separate buyers who would each like to write an offer on my listing. Can I do this?”
In this video Steve Jamieson, Managing Broker of RE/MAX Crest Realty Westside, discusses the different agency relationships that can be formed, the authorization required, and the documents that must be signed prior to writing a Contract of Purchase and Sale.
Here’s a brief summary:
Your agency relationships are key
Your true agency relationship with each party determines the way this situation should be handled.
Here are three possible relationship scenarios and the documents required for each:
1. No agency for either buyer.
If you aren’t in an active agency relationship with either buyer e.g. they’ve simply visited your open house, then the only agency relationship you have established is with the seller. Take care not to say or do anything that would infer otherwise.
No extra documentation is required, however you must ensure that each buyer has an opportunity to obtain independent legal advice. This should be written as a clause in each Contract of Purchase and Sale giving the buyers sufficient time to consult with their legal counsel.
2. Agency for one buyer. No agency for the other buyer.
Let’s say you have been working with one of the buyers to find a property. You have established an agency relationship, and now you are in the position of having to represent this buyer as well as the seller of the property.
If you have thought this through ahead of time, you would have already had a discussion with the seller concerning the possibility of Limited Dual Agency and obtained written consent from them if they agree. Note: it is highly recommended that you have this discussion upon taking the listing, not if & when the situation occurs.
Before you write up the Contract of Purchase and Sale, you would have your buyer read and sign the Limited Dual Agency Agreement that your seller has already approved
As for the other buyer, you don’t know them. Take care not to infer agency and be sure to advise them to obtain independent legal advice per scenario 1.
3. Dual agency between the buyers AND between each buyer AND the seller
Let’s say you have agency relationships with all three parties. Here are the authorizations that are required to be signed before you write up the contract:
- Limited Dual Agency Agreement signed by the seller and buyer 1
- Limited Dual Agency Agreement signed by the seller and buyer 2
- Consent to Designated Agent Acting for Competing Buyers / Tenants signed by buyer 1 and buyer 2.
Remember that you must disclose the full compensation that you will receive from the seller to each of the buyers that you represent.
Please note: The Frequently Asked Question video series is used for training purposes within our group of RE/MAX offices. If you are licensed at a different brokerage, you must refer to your own Managing Broker for advice.