A licensee acting for a vendor receives two written offers at once: one from a buyer the licensee has been showing homes to, and a higher but more conditional offer through another agency. How should the offers be presented?
Correct Answer
A) Submit both offers to the vendor together, with the full terms of each
The licensee must present all offers received to their vendor client simultaneously and with full details, allowing the vendor to make an informed decision. Showing favoritism to any particular offer would breach their fiduciary duty to act in their client's best interests.
Why This Is the Correct Answer
Rule 10.10 requires a licensee to submit to the client every written offer, and Rule 9.1 requires acting in the vendor's best interests. Putting both offers before the vendor together, with all their terms and conditions, lets the vendor compare price against conditions without the licensee favouring either buyer.
Why the Other Options Are Wrong
Option B: Present the offer from the licensee's own buyer first to give it a head start
Sequencing offers to favour a buyer the licensee knows puts that buyer ahead of the vendor client, contrary to Rule 9.1.
Option C: Present only the higher offer, because price is what matters most to vendors
Rule 10.10 requires every written offer to be submitted; the vendor, not the licensee, weighs price against conditions.
Option D: Tell the licensee's own buyer about the rival offer before presenting either one
Tipping off one buyer uses the vendor's confidential information for someone else's benefit, breaching Rule 9.16.
Deep Analysis of This Agency Practice Question
This question tests understanding of fiduciary duties and fair dealing obligations under the Real Estate Agents Act 2008. When a licensee receives multiple offers, they must present all offers to their vendor client simultaneously with complete information. This ensures the vendor can make an informed decision based on all available options. The principle of acting in the client's best interests means providing comprehensive information, not manipulating the presentation to favor any particular offer. This connects to broader agency law concepts including undivided loyalty, full disclosure, and avoiding conflicts of interest. The licensee's personal relationship with one offeror cannot influence their professional obligations to their vendor client.
Background Knowledge for Agency Practice
Under the Professional Conduct and Client Care Rules 2012, a licensee must act in the client's best interests (Rule 9.1), keep the client well informed (Rule 9.3), and submit every written offer to the client (Rule 10.10). Rule 6.2 requires fair dealing with all parties, and Rule 9.16 bars using the client's confidential information for anyone else's benefit.
Memory Technique
Remember FAIR: Full disclosure, All offers presented, Immediately and simultaneously, Remain neutral. Like a judge presenting evidence to a jury - you must show everything at once, not pick favorites or withhold information.
When you see questions about multiple offers, think FAIR. Ask yourself: Are all offers being presented? Is full information provided? Is the presentation simultaneous and neutral? This helps identify the correct approach.
Exam Tip for Agency Practice
Every written offer goes to the client (Rule 10.10); the licensee advises, but the vendor chooses.
Real World Application in Agency Practice
A licensee receives two offers on Friday afternoon - one from their neighbor offering $800,000 cash with no conditions, and another through a colleague offering $820,000 with building inspection and finance conditions. Rather than calling their neighbor first or only presenting the higher offer, they must prepare both offers with full details and present them together to their vendor client, explaining the pros and cons of each offer objectively.
Common Mistakes to Avoid on Agency Practice Questions
- •Showing favoritism to personal contacts
- •Filtering offers based on price alone
- •Presenting offers sequentially rather than simultaneously
Related Topics & Key Terms
Key Terms:
More Agency Practice Questions
A real estate agent receives two offers on a property at the same time. What is their primary obligation?
Which of the following situations would create a conflict of interest requiring disclosure by a real estate licensee?
Sarah is a licensed salesperson working for ABC Real Estate. When showing a property to buyers, who does she primarily represent?
Under the Real Estate Agents Act 2008, what is the primary duty that a real estate agent owes to their client?
Which licence allows a person to carry out real estate agency work for an agent, but only under supervision?
- → Under section 126 of the Real Estate Agents Act 2008, what must happen after the client signs an agency agreement for the agent to be entitled to commission?
- → A licensed agent discovers that their salesperson has been providing advice about tax implications of a property investment without appropriate qualifications. What is the agent's responsibility?
- → An agency agreement contains a clause stating that the agent's commission is payable even if the property is sold by the vendor directly to a buyer introduced by the agent during the agency period, but the sale settles after the agency expires. Is this clause enforceable?
- → What must a real estate agent disclose to a potential purchaser when showing a property?
- → Under a sole agency agreement, when is the vendor still liable to pay commission to the agent?
- → Sarah holds a salesperson's licence and works for ABC Real Estate. When presenting an offer to a vendor, who is legally responsible for ensuring all disclosure obligations are met?
- → A real estate agent discovers that a property has a leaky roof after the agency agreement is signed but before any offers are received. What is the agent's obligation?
- → Which of the following allows an agent to end an agency agreement before its expiry date?
- → Under the Real Estate Agents Act 2008, what is the primary fiduciary duty that a real estate agent owes to their client?
- → What must a licensee do when they become aware of a material defect in a property they are marketing?
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