Can a listing agent disclose the contract price to a back-up buyer?
Release Date: 4/02/2013
QUESTION: I have a listing that is under contract. I recently received an inquiry from another interested
buyer (I’ll call him Buyer 2). Buyer 2 knows the property is under contract but he wants to submit a back-up
offer. My client is not confident that the deal with Buyer 1 will close and is interested in entertaining a back-up
offer. The listing price is public knowledge but Buyer 2 has asked me to tell him the price that the parties agreed
to in the “primary” contract. Can I disclose that price to the back-up buyer?
ANSWER: No, unless the primary buyer authorizes the disclosure. The North Carolina Real Estate
Commission has adopted an explicit rule prohibiting the shopping of offers. Rule 58A.0109 states: “A broker
shall not disclose the price or other material terms contained in a party’s offer to purchase, sell, lease, rent, or to
option real property to a competing party without the express authority of the offering party.” In our view, even
though the primary buyer is already under contract with the seller, the primary buyer should still be considered
a competing buyer with respect to any buyer who is considering a back-up offer.
The issue of disclosure is addressed in the Back-up Contract Addendum (form 2A1-T). Paragraph 5 of the
Addendum is titled “Access to Primary Contract”. It states: “Buyer and Seller agree that Buyer may not
examine or otherwise have access to the Primary Contract without written permission from Seller and Primary
Buyer.”
Of course, Buyer 2 is free to offer any amount he wants for the listed property. However, under North Carolina
law, a licensee is not permitted to assist Buyer 2 in determining the amount of his competing offer by disclosing
the contract price.
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principles for member education only. They do not constitute legal advice. If you or a client requires legal advice, the
services of a private attorney should be sought. Always consult your broker-in-charge when faced with a question
relating to the practice of real estate brokerage.
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