But My Seller Said… Offers Edition

“But my seller said…” is a phrase that we often hear on the PAR Legal Hotline, and you’ve probably heard it more times than you can count in the field. While sellers certainly have the right to set expectations around their transactions, those expectations don’t override your obligations as licensees. 

Let’s dive into one of the more common situations we get questions about: when a seller sets offer-related requirements, like insisting on a Buyer’s Financial Information Sheet (Form BFI) or refusing to consider offers that include a Price Escalation Addendum (Form PEA). What happens when a buyer’s offer doesn’t meet those preferences?  

Let’s break it down. 

Yes, sellers can set preferences… with limitations. 

Sellers can establish requirements for how they’d like offers to be submitted – provided these requirements are not discriminatory and are applied consistently. For example, a seller can’t eyeball a potential buyer and say “I want a preapproval from THAT buyer before I’ll consider their offer” if they’re not going to apply that same criteria to ALL buyers. That opens the door to potential claims of discrimination – and in fact, that sort of behavior was the basis for some of the findings from some well-known fair housing testing in Long Island in 2019. The same goes for other criteria; if the seller wants some rule to apply, it should apply to all offers. 

But here’s the critical part: just because the seller sets a preference doesn’t mean a licensee is off the hook when it comes to presenting offers. 

What happens when an offer doesn’t meet the seller’s criteria? 

Some listing agents believe they should simply withhold offers that don’t meet the seller’s stated requirements – either declining to present them or insisting on additional documentation before forwarding them to the seller. 

That’s probably not a great option. 

Two key rules apply here: 

1. State Real Estate Commission Regulations – Section 292: Licensees must “present, in a reasonably practicable period of time, all offers, counter-offers, notices and communications to and from the parties in writing, unless the property is subject to an existing contract and the seller/landlord has agreed in a written waiver.” 
2. Code of Ethics – Standard of Practice 1-7: “When acting as listing brokers, Realtors® shall continue to submit to the seller/landlord all offers and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing.” 

Both clearly state that unless there’s a written waiver, offers must be presented. But the commission regulations make it clear that the waiver is only for properties that are already under contract. Bonus answer: You can find this waiver language in the ADDITIONAL OFFERS paragraph of the standard Listing Contract Exclusive Right to Sell Real Estate (Forms XLS). 

Setting expectations the right way 

So what should listing agents do? 

Have a proactive conversation with the seller. Let them know that while their preferences will be communicated to buyers, as a licensee, you are still required to present all offers in accordance with both state regulations and the Code of Ethics. 

Ultimately, it’s up to the seller to decide how to respond to an offer, even if it includes a Form PEA they dislike or lacks Form BFI. But the listing agent cannot refuse to present the offer just because it doesn’t check every box. The more prudent approach would be to simply forward the offers and let the seller make the decision about whether they want to open the offer or just reject it if it doesn’t meet their preferred criteria. 

We shouldn’t have to say it, but… 

In some hotline conversations, it becomes clear that the listing agent is the one trying to set the criteria, not the seller. That’s not good. If an agent or broker believes that certain forms or practices are better for their seller client, they should discuss those suggestions and preferences with the seller to see if the seller agrees and, if so, what they want the agent to do with that information. But under no circumstances should an agent or broker say something like, “My brokerage policy is to require a pre-approval,” or, “I hate escalation clauses and won’t present them.” If the seller agrees with those thoughts, then great – present it as a seller instruction. But if they haven’t agreed (or haven’t even been asked), a licensee who just creates their own criteria may be viewed as not working in the best interests of the client.