Dealings With Another Broker’s Client

QUESTION: I’ve been working with a buyer under an exclusive buyer agency agreement for several months. This past weekend I was out of town for some R and R. First thing Monday morning, my client called to tell me that she had made an offer on a property she had seen at an open house on Sunday afternoon! I asked why she hadn’t called me. She said she knew I was relaxing and didn’t want to disturb me, and that the listing agent had been kind enough to help her write up an offer. She says she told the listing agent that I was representing her.

I haven’t called the listing agent yet. I know there could be a procuring cause issue if my client buys the property. My question is, did the listing agent violate the Code of Ethics by helping my client write an offer?

ANSWER: Perhaps, depending on the specific facts. Article 16 of the REALTOR® Code of Ethics generally requires a REALTOR® to carry on all dealings concerning a property with a party’s exclusive representative and not the party. See Standard of Practice 16-13. Assisting a buyer in preparing an offer would certainly constitute “dealings” in our opinion. However, there are two exceptions to the general rule: (1) when the exclusive representative consents to direct dealings between her or his client and the other REALTOR®, and (2) where such dealings are “initiated by the client.”

The Professional Standards Committee of the National Association of REALTORS® has developed Interpretations of the Code of Ethics to help REALTORS® understand the ethical obligations created by the Code. The Interpretations present hypothetical situations involving charges of alleged unethical conduct by REALTORS® that are heard by hypothetical hearing panels. Case Interpretations 16-13 and 16-14 involve nearly identical fact patterns which are similar to your situation. In Case #16-13, after viewing an open house property and expressing a serious interest in it, an exclusively-represented but unaccompanied buyer indicated that he had pressing business travel plans and requested the listing agent’s assistance in preparing an offer. The listing agent obliged. In that case, the hearing panel determined that the listing agent had not violated Article16 of the Code of Ethics, concluding that the dealings had been initiated by the client. In Case #16-14, an exclusively-represented but unaccompanied buyer expressed serious interest in the property and said that he intended to discuss a possible offer with his buyer agent. The listing agent indicated that there were several other buyers interested in the property and encouraged the buyer to make an offer that day. The buyer decided to make an offer and the listing agent assisted in its preparation. In that case, the hearing panel determined that the listing agent had violated Article 16 of the Code, reasoning that the agent’s inducement of the buyer to make an offer through the listing agent constituted an initiation of dealings on the property by the listing agent, not the buyer.

Based on these two case interpretations, it seems clear that your client’s attendance at the open house and any expression of interest in the property she may have made to the listing agent would not, without more, constitute an initiation of dealings by your client that would justify the listing agent’s action in assisting her in the preparation of an offer on the property. However, if there are additional facts tending to indicate that your client directed the listing agent to assist her in the preparation of the offer, his decision to do so might be considered ethical. Ultimately, that decision would be up to a hearing panel following a careful examination of all the facts.