Sarah, a real estate agent, receives two offers on her client's property at the same time. One offer is higher but has more conditions, while the other is lower but unconditional. What is her primary obligation?
Correct Answer
C) Present both offers to the client with full details and her advice
The agent must present all offers to the client promptly and provide professional advice about each offer's merits and risks. The decision about which offer to accept belongs solely to the client, and the agent's fiduciary duty requires full disclosure of all opportunities.
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, which includes advising on the risk each set of conditions carries. The client then chooses.
Why the Other Options Are Wrong
Option A: Present only the higher offer, since it will earn her a larger commission
Filtering offers for her own commission puts her interest ahead of the client's (Rule 9.1) and withholds a written offer (Rule 10.10).
Option B: Choose the better offer herself and present only that one, using her judgement
Choosing between offers is the client's decision; Sarah must submit every written offer and advise, not decide.
Option D: Negotiate with both buyers to improve their offers before the client sees them
Holding offers back to negotiate first delays information the client is entitled to and takes a decision that is the client's to make.
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 present all offers to clients. The scenario highlights a common dilemma where agents might be tempted to filter offers based on their own judgment or financial interests. The principle at stake is client autonomy - the fundamental right of property owners to make informed decisions about their own assets. This connects to broader agency law concepts including the duty of loyalty, full disclosure, and avoiding conflicts of interest. The agent's role is advisory, not decisional. By presenting both offers with professional analysis, the agent fulfills their duty while empowering the client to weigh factors beyond just price, such as settlement certainty, timing, and risk tolerance. This principle protects both clients and agents from potential disputes and regulatory action.
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), communicate in a timely way (Rule 9.3), and submit every written offer to the client (Rule 10.10). Advice on conditions, such as finance or building report clauses, is part of acting in the client's best interests; the decision stays with the client.
Memory Technique
Remember PAPA: Present All offers, Provide Advice, but the Principal (client) Always decides. Like a waiter presenting all menu options with recommendations, but the customer chooses what to order.
When you see questions about multiple offers or agent decision-making, think PAPA. The agent must Present All offers, Provide professional Advice about each, but the Principal (client) Always makes the final decision. This eliminates options where agents filter offers or make choices for clients.
Exam Tip for Agency Practice
Submit every written offer and advise on each; the client, not the licensee, weighs price against conditions.
Real World Application in Agency Practice
An agent receives three offers on a Friday afternoon: one at asking price with a building inspection condition, one $10,000 below asking but unconditional, and one above asking but subject to finance approval. Rather than filtering these based on price alone, the agent contacts the vendor immediately, presents all three offers with detailed analysis of each condition's implications, settlement timeframes, and associated risks. The vendor, who needs a quick unconditional sale due to their own purchase settlement, chooses the lower unconditional offer, demonstrating why client choice is paramount.
Common Mistakes to Avoid on Agency Practice Questions
- •Thinking agents should filter offers to save clients time
- •Believing higher price always means better offer
- •Assuming agents can make preliminary decisions before consulting clients
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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