A vendor instructs their agent not to accept any offers below $800,000, but the agent receives an offer of $750,000 from a buyer they know can go higher. What must the agent do?

Q: What is the correct answer to: A vendor instructs their agent not to accept any offers below $800,000, but the agent receives an offer of $750,000 from a buyer they know can go higher. What must the agent do?

The correct answer is Present the offer and advise the vendor of the buyer's potential capacity. Option B is correct because agents have a fiduciary duty to present all genuine offers to vendors, regardless of instructions to reject offers below certain amounts. Under Australian Consumer Law and state legislation governing real estate practice, agents must act in their principal's best interests by ensuring they have complete information. Additionally, providing information about the buyer's capacity (while respecting confidentiality) gives the vendor valuable context for decision-making, fulfilling the agent's duty to provide professional advice and market intelligence.

Q: What background knowledge is needed for this Agency Practice question?

Real estate agents in Australia operate under strict fiduciary duties established by state legislation and Australian Consumer Law. Key obligations include acting in the principal's best interests, avoiding conflicts of interest, and maintaining transparency. The duty to present all offers stems from the principle that vendors must have complete information to make informed decisions. Agents cannot simply follow restrictive vendor instructions if doing so would breach their broader fiduciary duties. State licensing laws typically require agents to present offers within specified timeframes and provide professional advice while respecting confidentiality obligations to all parties.

Q: What is a good way to remember the answer to this Agency Practice question?

PRESENT: Present all offers, Respect fiduciary duties, Educate with market intelligence, Share relevant buyer information, Ensure vendor makes informed decisions, Never exceed authority, Transparency in all dealings. Think of unwrapping a PRESENT - you must show what's inside (the offer) along with the card (additional information about buyer capacity). When facing offer presentation questions, remember PRESENT. Ask yourself: Am I presenting the offer? Am I respecting my fiduciary duties? Am I providing helpful context while maintaining transparency? This helps identify that agents must present offers regardless of vendor restrictions while providing valuable additional information.

Q: What exam tip applies to this Agency Practice question?

Look for questions about offer presentation and remember: agents must ALWAYS present genuine offers regardless of vendor instructions. The key is presenting the offer PLUS providing relevant additional information that helps the vendor make informed decisions.

Q: How does this Agency Practice concept apply in Australian real estate practice?

A vendor lists their property for $850,000 and instructs their agent to reject anything under $800,000. The agent receives a $750,000 offer from buyers who previously looked at a $900,000 property and have pre-approval for $850,000. The agent must present the $750,000 offer to the vendor while advising that the buyers appear to have capacity for a higher amount based on their previous property interests and finance approval. This gives the vendor complete information to decide whether to reject, accept, or counter-offer strategically.

Question

Agency PracticeFiduciary DutiesMEDIUM

A vendor instructs their agent not to accept any offers below $800,000, but the agent receives an offer of $750,000 from a buyer they know can go higher. What must the agent do?

Answer Options

A

Reject the offer without presenting it to the vendor

B

Present the offer and advise the vendor of the buyer's potential capacity

C

Counter-offer at $800,000 without consulting the vendor

D

Encourage the buyer to increase their offer before presenting it