A vendor instructs their agent not to accept offers below $800,000. The agent receives an offer for $750,000. What should the agent do?

Q: What is the correct answer to: A vendor instructs their agent not to accept offers below $800,000. The agent receives an offer for $750,000. What should the agent do?

The correct answer is Present the offer to the vendor despite their instructions. Option B is correct because agents have a fiduciary duty under Australian agency law to present all legitimate offers to their principal, regardless of previous instructions about minimum prices. This duty ensures vendors receive complete market information to make informed decisions. The vendor's circumstances or market conditions may have changed since the initial instruction, and they retain the right to consider all offers. Failing to present legitimate offers could constitute a breach of the agent's duty of care and potentially result in professional misconduct charges.

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

Under Australian agency law and state-based real estate legislation, agents owe fiduciary duties to their principals including loyalty, good faith, and full disclosure. The duty to present all legitimate offers stems from the broader obligation to act in the client's best interests and provide complete information for decision-making. This principle is reinforced by professional conduct standards administered by state regulatory bodies. Agents who fail to present offers may face disciplinary action, including license suspension. The concept of 'legitimate offers' excludes frivolous or clearly inappropriate proposals but includes all genuine purchase attempts, regardless of price.

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

Remember PRESENT: 'Principal Receives Every Single Earnest Negotiable Tender.' Just like a gift must be presented to be received, every legitimate offer must be presented to the vendor, regardless of the agent's or vendor's initial preferences about price. When you see questions about offer presentation, think 'PRESENT' - the agent must always present legitimate offers to the principal. If the question involves an agent making decisions about offers without consulting the vendor, the answer is likely wrong.

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

Look for questions where agents are making decisions instead of presenting information to vendors. The correct answer almost always involves presenting offers to the principal, not the agent making independent judgments about acceptability.

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

A vendor lists their property for $900,000 and instructs their agent not to present offers below $850,000. After two months with no offers, the market softens and the vendor faces financial pressure. An offer comes in at $820,000 with favorable settlement terms. The agent must present this offer because the vendor's circumstances may have changed, and they need current market information to make an informed decision about their options.

Question

Agency PracticeAgent Principal RelationshipMEDIUM

A vendor instructs their agent not to accept offers below $800,000. The agent receives an offer for $750,000. What should the agent do?

Answer Options

A

Reject the offer without consulting the vendor

B

Present the offer to the vendor despite their instructions

C

Negotiate with the buyer to increase the offer to $800,000

D

Accept the offer if they believe it's reasonable