A broker receives a full price offer on a house they are listing. Before they present the offer to the seller, another broker brings in an all cash offer for $5,000 less. The listing broker is to:
Audio Lesson
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Question & Answer
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present both offers at the same time.
Presenting both offers simultaneously would create an artificial situation where the seller cannot evaluate each offer independently. This could disadvantage the seller who might respond to the first offer with a counteroffer before knowing about the second option.
refuse to present the second offer.
Refusing to present the second offer violates the listing broker's fiduciary duty to the seller. California law requires brokers to present all offers to their client, regardless of who brings them in.
tell the other broker the property has been sol
d. present the first offer in the morning and the second offer in the evening.
Presenting offers at different times creates an artificial delay that disadvantages the seller. The broker's duty is to present all offers promptly so the seller can make an informed decision without unnecessary delays that could harm their interests.
Why is this correct?
Option C is correct because it accurately reflects California law requiring brokers to present all offers to sellers. The phrase 'tell the other broker the property has been sold' is the appropriate action to take before presenting the first offer, as it maintains the integrity of the negotiation process and fulfills the broker's fiduciary duty to the seller.
Deep Analysis
AI-powered in-depth explanation of this concept
This question tests understanding of a broker's fiduciary duties when handling multiple offers on a listed property. In California real estate practice, the listing broker has a primary obligation to their client (the seller) to obtain the best possible terms. When multiple offers are received, the broker must present them in a way that allows the seller to make an informed decision. The question presents a scenario where the listing broker has a full-price offer and subsequently receives an all-cash offer that's $5,000 less. The correct approach involves presenting both offers to the seller, but the question specifically asks what the listing broker should do before presenting the first offer. Option C is correct because telling other brokers the property is 'sold' (when it's not) would be misrepresentation and violates California real estate law. The other options either fail to properly represent the seller's interests or create artificial delays that could disadvantage the seller.
Knowledge Background
Essential context and foundational knowledge
California law requires real estate brokers to act in their client's best interests when handling offers. Civil Code § 2079.15 specifically addresses broker conduct when multiple offers are received. The broker must present all offers to the seller, but can establish reasonable procedures for doing so. This regulation exists to protect sellers from having their best interests compromised and to ensure transparency in the transaction process. The broker's fiduciary duty includes loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care - all of which are relevant when handling multiple offers.
SELL - Submit all offers, Evaluate each independently, List all terms clearly, Let seller decide
When encountering multiple offer questions, remember SELL to recall your obligations as a listing broker
For multiple offer questions, remember brokers must present ALL offers but can establish reasonable procedures. Look for options that respect the seller's right to consider all offers while maintaining negotiation integrity.
Real World Application
How this concept applies in actual real estate practice
Imagine you're listing a home in a competitive market. You receive an offer at asking price from Buyer A represented by Broker X. Later that afternoon, Buyer Y's broker (Broker Z) submits a $5,000 lower all-cash offer. Before presenting the first offer to your seller, you should inform Broker Z that the property is 'sold' (even though no final acceptance has occurred). This maintains negotiation leverage while ensuring you'll present both offers to your seller, allowing them to make an informed decision considering both price and financing terms.
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