An agent receives two offers on the same property within minutes of each other. The first offer is lower but from a buyer the agent knows well. The second offer is higher but from an unknown buyer. What must the agent do?
Correct Answer
C) Submit both offers to the vendor together with the full details of each
The agent has a fiduciary duty to present all legitimate offers to the vendor with complete information. The vendor must be given all relevant details to make an informed decision, regardless of the agent's personal relationships or preferences.
Why This Is the Correct Answer
Rule 10.10 requires every written offer to be submitted to the client, and Rule 9.1 requires acting in the client's best interests. The agent's personal connection to one buyer is irrelevant: both offers go to the vendor with full details, and the vendor chooses.
Why the Other Options Are Wrong
Option A: Present only the higher offer, so that the vendor is not confused by having two
Rule 10.10 requires every written offer to be submitted; the vendor decides, and two offers are information, not confusion.
Option B: Present the lower offer first, because it arrived a few minutes earlier
Arrival order gives no priority, and sequencing to help a buyer the agent knows favours that buyer over the client.
Option D: Ask the buyer the agent knows to raise their offer before presenting either
Using the rival offer to coach a friendly buyer exploits the vendor's confidential information for someone else (Rule 9.16).
Deep Analysis of This Agency Practice Question
This question tests understanding of an agent's fiduciary duties under the Real Estate Agents Act 2008, specifically the obligation to act in the vendor's best interests. The scenario presents a common ethical dilemma where personal relationships might influence professional judgment. The fundamental principle is that agents must present all legitimate offers to vendors with complete information, allowing them to make fully informed decisions. This duty transcends personal preferences, timing considerations, or the agent's relationship with buyers. The question highlights the importance of transparency and the vendor's right to consider all available options. This connects to broader agency law concepts including undivided loyalty, full disclosure, and the prohibition against self-dealing or preferential treatment that could compromise the vendor's interests.
Background Knowledge for Agency Practice
Under the Real Estate Agents Act 2008, licensed agents owe fiduciary duties to their vendor clients including loyalty, obedience, disclosure, confidentiality, reasonable care, and accounting. The duty of disclosure requires agents to provide all material information that could affect the vendor's decision. This includes presenting all legitimate offers promptly and completely. The Act prohibits agents from acting in ways that conflict with their client's interests or showing preferential treatment to buyers. These duties are reinforced by the Real Estate Agents Authority's rules and the Code of Professional Conduct and Client Care, which emphasize transparency and putting client interests first.
Memory Technique
Remember FAIR: Full disclosure, All offers presented, Impartial treatment, Right to choose belongs to vendor. Like a judge who must hear all evidence before making a decision, an agent must present all offers to let the vendor be the judge.
When you see questions about multiple offers or agent duties, think FAIR. Ask yourself: Are all offers being presented fully and impartially? Is the vendor getting complete information to make their own choice? This helps identify the correct answer focusing on transparency and vendor rights.
Exam Tip for Agency Practice
Personal connections never change the rule: every written offer goes to the client with full details (Rule 10.10).
Real World Application in Agency Practice
A listing agent receives three offers on a popular property within an hour. One is from their colleague's buyer (lower price, good conditions), one from a previous client (medium price, subject to finance), and one from an unknown buyer (highest price, cash). The agent must prepare a comprehensive comparison showing all three offers with full details including prices, conditions, settlement dates, and any other material terms. The vendor can then evaluate factors beyond just price, such as certainty of settlement, timing, and risk levels to make the best decision for their circumstances.
Common Mistakes to Avoid on Agency Practice Questions
- •Thinking personal relationships with buyers should influence offer presentation
- •Believing chronological order determines presentation priority
- •Assuming the highest offer is automatically the best choice for the vendor
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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