In a crazed seller’s market, sellers are often presented with dozens of offers to choose from.  The time and effort to pick the right offer is exhausting and the listing agent and seller may not want to respond to the unsuccessful offers.  While the sentiment is understandable, brokers have legal and ethical duties to ensure that all offers were actually presented to the seller.  Below is a previously published Q & A addressing how brokers can document their compliance with this obligation.    

Featured Question

The Residential Resale Real Estate Purchase Contract has an area for a Seller to Reject offers. It has always been my practice to provide the Buyer’s Agent with a copy of the Seller Rejected Contract. A year ago, I moved to a part of the state where the practice of returning Rejected Offers is not common practice.

I was in a meeting with Commissioner Judy Lowe who said as the Auditors are reviewing rejected offers if a Buyer’s Agent does not receive the Rejected Offer from the Listing Agent to keep a copy of an email requesting a copy.

I was also in a class where the instructor said that the Seller was not required to initial the Rejected Area of the Contract. Can you provide some clarification on this issue?

MICHELLE’S RESPONSE: To help real estate licensees avoid allegations that an offer was not submitted to the seller or not provided in a timely manner, the Arizona REALTORS® added a box to the contract to prompt the seller to acknowledge that an offer was submitted and rejected on the date specified. The seller’s initials evidence that both the listing broker and the buyer’s broker complied with the Arizona Department of Real Estate (ADRE) Rules. 

Additionally, to help clarify the ethical requirements within the Code of Ethics, Standard of Practice, the National Association of REALTORS® revised section 1-7 to require: 

Upon the written request of a cooperating broker who submits an offer to the listing broker, the listing broker shall provide, as soon as practical, a written affirmation to the cooperating broker stating that the offer has been submitted to the seller/landlord, or a written notification that the seller/ landlord has waived the obligation to have the offer presented.

The rationale for this addition to the Code of Ethics is that it benefits the listing brokers by confirming their ethical duty to present offers consistent with the other provisions of Standard of Practice 1-7, and it benefits cooperating brokers by affording them written confirmation of offer presentation to provide to their buyers.

However, the instructor was correct that generally speaking, a seller has no legal obligation to respond to an offer, and the offer expires if not accepted by the deadline set forth in the Contract. 

By statute, real estate brokers must maintain copies of all rejected offers for a one-year period. See A.R.S.§32.2151.01(I). To comply with this statute, the buyer’s broker must maintain a copy of the unaccepted offer they submitted on the buyer’s behalf for a one-year period. 

If the buyer’s broker is unable to obtain the rejected offer initialed by the seller, a buyer’s broker may want to consider maintaining a copy of the request to the listing agent for the rejected offer with the seller’s initials or a written affirmation from the listing agent that the offer was submitted and rejected to address any questions that may arise from the buyer, in an ADRE audit, or a Professional Standards complaint. 

K. Michelle Lind, Esq. is an attorney who currently serves Of Counsel to the Arizona REALTORS®.  She is also the author of the book – Arizona Real Estate: A Professional’s Guide to Law and Practice (3rd Ed.).  Watch for the Fourth Edition, which should be available soon. 

 For more real estate related articles, visit Michelle’s Blog at Arizona Real Estate – A Professional’s Guide to Law & Practice. (arizonarealestateprofessionalguide.blogspot.com)