In my buyer's agent role I sometimes have several clients interested in the same property. There is nothing in the EBA contract or in the NAR or Realtor's guidelines that address how to handle multiple bidders on the same property when you represent more than one of the bidders. The only legal advice I have received so far is that I CANNOT disclose that I am the buyer's agent for other bidders on the same property (counterintuitive, but apparently protecting confidentiality of your buyer is paramount). Appreciate any advice.

Gail,
Regardless of the legal advice I would not want to be the buyers agent for multiple buyers making offers on the same property.

When functioning as a Dual Agent both buyer and seller are aware of the situation.

In the multiple Buyers and single Buyers Agent situation I think that you are doing a disservice to at least one of the buyers. As a general rule most buyers need alot more help and advice than the typical seller. I would be interested to hear what one of the ABR instructors feel about this situation.

I have shown the same properties to buyer agency clients but, I could not put offers in on the same property with 2 different clients that I had an agency agreement with. In fact, I doubt if I would put in multiable offers on the same property under any circumstances.

Hello
It should be really hot property that so many of your clients are attracted.

Talk to your broker and have some other agents in your office represent buyer's. Get a referral fee or split if that client's contract is accepted.

Ritu

Paul, I agree.

Shamrock, Multiple bidders are good for the seller, but obviously not for the buyer. However, in the area I specialize in, multiple bid situations are not unusual.

Ritu, That makes a lot of sense to me. I could see if my Sales Manager would take one and I could take the other. Thanks.

It CAN happen, although it's a fairly rare occurence.
As with everything else in real estate relationships, however, the key to doing things right is "disclosure." I don't/can't agree with the advice you've been given about not telling each buyer that you're looking after the other(s). If you're truly looking after their best interests (and this is what being their buyer agent means, doesn't it?), you owe them the information. At the same time, you should give (each of) them the chance to sever your buyer agency relationship with them with regard to the subject property -- and perhaps you could/should have a referral lined up with a fellow agent who'd take care of them instead of you (which again illustrates your commitment to looking after their best interests, doesn't it?).
Nevertheless, where your real difficulty is going to lie (assuming your clients are prepared to let you handle their separate offers) is in giving them what in effect is the same chance to get their offer accepted. In some way (and there are various options), you need to tell them what "the magic number" is, even though you have to keep each offer figure confidential.
On this point, perhaps I can mention a situation I'm presently involved in. It's a commercial property that's "up for tender" and I'm in a buyer broker relationship with (yep!) three could-be/would-be purchasers, all of whom are prepared to let me work as their agent. However, they all know the situation and aren't raising objection to it. (How lucky can you get, eh?) But I'm handling the offer price problem by saying the following in so many words:
"It's going to take a minimum of xxxx$ if you want your offer to be accepted and every xx$ above that figure will increase your chances of a successful bid. I won't reveal your figure to your "competitors" and I won't tell you what their figures are. The most I'll do -- but only if you agree to it -- is to ask for a signback that gives you a chance to match the highest figure. However, I'm honour bound to offer this same opportunity to the others and, of course, it's entirely up to the seller as to whether they'd give a sign back instead of simply accepting the highest bid they receive."
This is undeniably an unusual situation and, to compound the agony, there are at least two other buyer agents whose clients are more than likely to be submitting bids.
In any case, though, I like to think that the principle of disclosure ensures that everyone is given the necessary information in as fair and complete a manner as the situation permits.

Duncan

PS. In case you're wondering, the property is NOT listed, nor does the seller wish/intend it to be. They've simply encouraged me (and the other potential buyer agents) to drum up bids with the idea of choosing what they consider to be the best one (which, interestingly enough, involves the background of the "right buyer" as well as the amount of his offer). Who says real estate is a dull, cut and dried business, eh?!!

Duncan,

What an interesting situation you are in. My fiance is in commercial real estate, so I know how different those deals are from residential ones. Your clients have a high degree of trust in you. I hope someday I can have a reputation like that.

Yes, I am learning about the importance of the "right buyer". A seller got tired of the games my client was playing and chose to sell to another bidder. The seller didn't care that my seller was willing to pay more for the property.

As for the disclosure to other buyers, legal opinion is that I absolutely cannot do that. I think the best thing in my situation is to do a referral to my Sales Manager.

Gail
A lawyer my be basing his advise on a portion of the Form 300 3.Agency clause i.e. "I hereby agree that the terms of any buyer's offer or agreement to purchase or lease the property will not be disclosed to any other buyer." but a lawyer for the other clients may believe that a court would find that such a clause was too self-serving and that you had a fiduciary duty to your other clients. In any event you could end up involved in litigation, which is very costly and time consuming. Look deeper and carefully into this matter. Ask you lawyer if he will represent you in the event you become involved on a "Contigency Fee Basis" in a written retainer.

Not disclosing the terms of the other buyer's offer is far different from not disclosing the existance of another interested buyer.

You should already have a buyer agent contract with both that would cover this anyway.

I write more than one offer on a single property all the time. I don't just send the properties I find out to just one investor, I send it to everyone in seperate emails. I never disclose the details of any one offer or that I actually wrote the contract, just the fact that they will be in a multiple bid situation and be ready to come in with a highest and best offer.

Shouldn't be a problem, if it's done carefully.

This was in my weekly update from NAR about legal issues. It seems from this decision in Montana, that whether you can represent multiple buyers for a single property depends on how the state law is written. In Montana, according to this court decision, you can't!

Salesperson Cannot Represent Competing Purchasers
Montana's highest court rules that state law requires buyer's representatives to act solely in the best interests of their clients. (You may need to login to view this.)

http://www.realtor.org/letterlw.nsf/pages/0607zuazua?OpenDocument

Betty

The "Law of Agency" and your fiduciary obligations to your client is paramount. Your State real estate association should be able to advise you concerning their rules on "disclosure".

Locally, it would appear from a legal perspective that you have a "conflict of interest" situation i.e. an "undisclosed duel agency" situation, and until such time as you make full and timely disclosure to your clients and obtain their written consent to your multiple representation of clients on the same property, you risk becoming involved in a lawsuit with one or all of your clients for a breach of your fiduciary duty to each one of them. Therefore, I urge you to confer with another attorney.

Important Notice: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information

That doesn't even make sense - I think you HAVE to disclose (obviously not the terms involved). I'd get a second opinion...fast!

"Broker may show properties in which the Buyer is interested to other prospective Buyers without breaching any duty or obligation to such Buyer. Broker shall not be prohibited from showing competing Buyers the same property and from assisting competing Buyers in attempting to purchase a particular property."

That paragraph in our contract takes care of that problem where I am.

Ref. Case:
Salesperson Cannot Represent Competing Purchasers

In response to a certified question propounded by a federal court, Montana’s highest court considers whether the state’s license laws allow a buyer’s representative to represent clients who are bidding against each other for the same property.

Amador Zuazua (“Bidder 1”) hired Patti Stone (“Buyer’s Representative”) of Coldwell Banker Gateway Realty (“Brokerage”) to represent him in negotiations for a property (“Property”). Bidder 1 signed an agency disclosure form which contained the legal requirements for buyer’s representatives in the state.

Louis Moritzky (“Bidder 2”) entered into a similar relationship with the Buyer’s Representative, signing an identical representation agreement. Bidder 2 also was interested in the Property. On July 8, 2003, Bidder 1 authorized the Buyer’s Representative to make a bid for the Property. On July 12, 2003, Bidder 2 also directed the Buyer’s Representative to submit a bid for the Property. The owner of the Property decided to accept Bidder 2’s offer.

Bidder 1 filed a lawsuit against the Buyer’s Representative and the Brokerage in the United States District Court for the District of Montana. The lawsuit argued that the Buyer’s Representative failed to fulfill her statutory duties to Bidder 1 by representing competing bidders for the same property. Since the state’s license law was not clear on the proper result and there were no prior cases considering Montana law on this issue, the federal court sent a certified question to the state’s highest court asking them to interpret Montana law.

The Supreme Court of Montana determined that buyer’s representatives representing competing bidders for the same property violated Montana law. The court first looked at the language of the state’s license law. One section of the license law sets forth the duties owed by a salesperson to his/her client depending on the type of relationship undertaken by the parties, including the duties of a buyer’s representative to his/her client. That part of the law does not explicitly state whether or not a buyer’s representative can represent competing bidders but instead states that a buyer’s representative must “act solely in the interests of the buyer.”

Bidder 1 argued that that the use of the word “solely”, which he interpreted to mean “only”, shows that the license law is intended to limit a buyer’s representative to only a buyer who is interested in acquiring a particular property. Conversely, the Buyer’s Representative interpreted the license law as only requiring that the licensee act in the best interests of the “class” of buyers, not a specific buyer.

The court ruled that this section of the license law limited a buyer’s representative to one buyer for a specific property at a particular time because a buyer’s representative could not act in the “best interests” of the buyer if he/she was representing multiple parties in the bidding process. This is because a buyer’s representative who is representing competing bidders is precluded from advising his/her client on the most important part of the transaction- the price that they need to bid in order to obtain the property, since the buyer’s representative obtained the other bid amount(s) in confidence. The court also found that the buyer’s representative could also misuse such information to create a bidding war, thereby increasing his/her commission from the transaction.

The Montana Association of REALTORS® (“Association”) filed an amicus curiae brief in the case arguing that because the dual agent portion of the license law requires that the dual agent “act solely in the best interests” of both the buyer and seller, it demonstrates that buyer’s representative can represent competing bidders. The Association’s argument was that the license law merely required that licensees not act adversely to their client’s interests, and the Association cited out-of-state cases which supported this argument. The court disagreed with the Association’s argument, finding that “act solely in the best interests” of a buyer imposed a duty on the buyer’s representative to help the buyer achieve their goals, not merely avoid acting counter to the buyer’s interests. Because representing competing bidders could create a conflict of interest for the buyer’s representative, the court ruled that the state law prohibits a buyer’s representative from representing competing bidders for the same property.

The Brokerage also argued that another part of the license law demonstrated that a buyer’s representative could represent multiple parties. This part of the license law states that a buyer’s representative must “disclose all relevant and material” information he/she knows to his/her client, unless this information was obtained from a “prior or existing” agency relationship. The Brokerage argued that since a buyer’s representative only represents buyers, this section demonstrated that it was permissible for a buyer’s representative to represent more than one buyer. However, the court rejected this argument, determining that the exception in this section only applied to dual agents and did not concern simple buyer’s representatives. Thus, the court determined that Montana’s license law does not allow a buyer’s representative to represent competing bidders for the same property and so sent that answer back to the federal court.

Three justices dissented from the majority opinion. The dissent agreed that the Brokerage had demonstrated that the license law did allow for multiple representation, finding that the legislature had broken the license law into parts for each type of representation and the section concerning multiple representation cited by the Brokerage appeared in the buyer’s representative portion of the license law.

Zuazua v. Tibbles, 150 P.3d 361 (Mont. 2006).