During a multiple-offer situation in Bentonville, a listing agent receives three offers simultaneously. Without disclosing the existence of other offers, she tells Buyer 1 that the seller will accept only if the price is raised by $10,000. Buyer 1 agrees and submits a revised offer. The seller then accepts Buyer 1's revised offer. Under AREC rules and Arkansas agency law, which statement best describes the listing agent's conduct?
Correct Answer
C) The listing agent may have violated AREC rules by misrepresenting material facts to Buyer 1 during negotiations
Under AREC rules and Arkansas agency law, a listing agent owes honesty and fair dealing to all parties, including buyers who are not the agent's clients. Falsely implying that a price increase is the seller's only condition—without disclosing that competing offers exist—could constitute a misrepresentation of material facts. AREC rules prohibit licensees from making false or misleading statements during negotiations. While the agent is not required to disclose the terms of competing offers, actively misleading a buyer about the negotiation circumstances may constitute a violation.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
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