Response to a Recent Inquiry
Regarding
Presentation of Offers After
Seller Has Accepted Offer
Dear :
You have inquired as to whether a real estate agent must continue to present offers to purchase to a seller who has already accepted an offer.
In this regard, the Real Estate License Law requires real estate agents to deliver offers to purchase real estate to sellers within a "reasonable time" which the Real Estate Commission has defined as not later than five days after the signing of the offer. Neither the Real Estate License Law nor the Commission's Rules relieve the agent of further responsibility for presenting offers upon the acceptance of an offer by a seller.
Aside from this legal requirement, there appears to be sound rationale for continuing to present offers; namely, that in the event the sale is not consummated due to the offeror's failure or inability to satisfy some material term, condition or contingency of the offer, then the seller (who is usually the agent's client) would benefit by having accepted a "backup offer" committing a second buyer to the purchase of his or her property.
However, the agent must make it perfectly clear to the seller that although the "backup contract" may be more advantageous to the seller than the primary contract, nevertheless it must remain dormant unless and until the primary sales contract has been breached or is otherwise terminated. Likewise, persons who make "backup offers" must clearly understand that the primary contract will take precedence over any "backup contract" and will not become operative until the primary contract is no longer pending.
Of course, if after accepting an offer a seller instructs the agent not to solicit any further Offers, then the agent should follow his principal's wishes. However, if a subsequent offeror insists on making a written offer, the agent should present the offer to the seller to be rejected.
Yours very truly,
NORTH CAROLINA REAL ESTATE COMMISSION
Response to a Recent Inquiry
Regarding
Financing Terms In
Offers to Purchase
Dear
You state in your recent letter that it is the practice of some real estate agents to insert the term "Prevailing Rate" in those provisions of Offers to Purchase and Contract regarding the interest rate which purchasers (offerors) are willing to pay and the discount points which purchasers or sellers are willing to pay. You have inquired as to the Real Estate Commission's position regarding the propriety of using this general term in lieu of a more specific statement as to the maximum interest rate and discount points which the parties are willing to pay.
In this regard, it is the position of the Real Estate Commission that an offer to purchase real estate should set forth in detail the terms of the purchaser's offer and the seller's acceptance. While the validity and enforceability of a sales contract might not be jeopardized by a provision to the effect that the interest rate on the purchaser's loan and the discount points payable by the seller or purchaser shall not exceed the "Prevailing Rate", nevertheless the lack of specificity in describing these material conditions of the offer and acceptance could lead to controversy and ill feeling between the parties and the agent should the interest rate and/or discount points substantially exceed those anticipated by the parties at the time the sales contract is executed.
For this reason, the Commission feels that the offer and acceptance should set forth the maximum interest rate and discount point amount which the parties would be willing to pay recognizing that the actual interest rate and discount points oftentimes cannot be accurately predicted at the time the offer is made. In doing so, purchasers could be better assured that their future monthly mortgage payments will be within acceptable and affordable limits and the party responsible for paying the loan discount points will be better assured as to the maximum amount of funds needed to close the transaction.
Yours very truly,
NORTH CAROLINA REAL ESTATE COMMISSION