Receiving an SMCO Absent Multiple Offers

April 16th, 2018 at 2:51 pm

Multiple Choice Question: Last week, you discussed whether a listing agent, who has only received one offer, can use a Seller Multiple Counter Offer (SMCO). I’m the buyer’s agent in that situation. I received an SMCO, but I doubt that the seller has received any other offers. How should I handle this situation? Pick the best answer:

A.  Ask the buyer how the buyer would like to proceed.
B.  Have the buyer sign the SMCO, and wait and see if the seller signs again.
C.  Let the buyer buy something else.
D.  Ask the listing agent whether he or she has received any other offers. 

Answer: As background, using the SMCO means that no contract is formed until the seller signs in paragraph 5, the buyer signs in paragraph 7, and the seller signs again in paragraph 8. Answer A is the best answer because it’s up to the buyer to decide how to proceed. Some buyers love the house so much that they just want to sign the SMCO, and wait and see if the seller signs again (Answer B). Other buyers are so appalled at the possible dishonesty of the listing agent and seller that they no longer want to move forward with the deal (Answer C). Only those buyers in between those 2 extremes may want you to ask the listing agent whether they have received any other offers (Answer D).

If you do ask the listing agent, pose a direct question. The listing agent is not allowed to tell a lie in response (under CalBRE licensing rules). If the listing agent says “yes,” the buyer can request to see the other offers, e.g., using a Buyer Counter Offer. If the listing agent says “no,” the buyer can ask for a Seller Counter Offer (SCO) instead of SMCO. If the listing agent says, “I’m not required to answer that question,” that’s essentially the same as a “no” answer, at least in my mind. However, if you are not convinced, you may want to point out that the NAR Code of Ethics says that the listing agent must, with the seller’s approval, disclose the existence of offers (Standard of Practice 1-15). Ultimately, the seller is not required to show the buyer the other offers or issue an SCO. Hence, the buyer may end up preferring Answer B or C over Answer D.

-Thank you to Stephanie Payab (Encino Office) for suggesting this week’s legal tip.

Copyright© 2018 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of April 16, 2018. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals.

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