When Can you “Call-back” an Offer in Dual Agency?
This situation is somewhat unusual, perhaps more “theoretical than real”. Here’s the question.
You obtain a listing, show the property to a buyer and obtain an offer from that buyer. The offer states the deposit was submitted "upon acceptance" of the offer. Before you can meet with the sellers and present the offer, the buyer calls you and informs you he has changed his mind and does not want you to present the offer.
Would it make any difference if this buyer had signed a customer service agreement rather than a buyer representation agreement?
We really should break down the anatomy of an Offer here. The "offer" generally is presented when delivered into the hands of the Listing Agent. This may not be the case when it comes to this scenario.
Let’s assume that Bill attends an Open House, meets Bob, the agent and wishes to purchase the house. First, Bob may or may not have indicated that agency was available. He may simply have suggested customer service.
In any event, let’s look at all the steps in the process.
The Offer was:
1) discussed, between Bill and Bob,
2) drawn up, by Bob,
3) signed, by Bill,
4) given into the possession of Bob, the Agent, on behalf of the Buyer,
5) held in escrow by Bob for the Buyer,
(at this point Bob doesn’t “have it” on his own, he still has it for Bill)
6) released from escrow, and potentially available for communication to Seller,
(here, both Bob and Bill will agree that it was Bob’s to take away)
7) held in possession by Bob as the Seller's agent,
8) communicated to Seller, (by any method telephone call, email, text)
9) presented to Seller.
At what point can Bill “call-back” the Offer?
You will appreciate that we have to reach at least step 6. All of these steps could take place within a few minutes in a coffee shop, but until we reach a point where it’s Bob’s Offer to take away, then Bill can counter his previous statements/ comments/ instructions and “call back” the delivery of the Offer. It was truly not “irrevocable” until it came into the possession of Bob as the Seller’s agent. When Bob was still acting in some capacity for Bob, whether that be agency or customer service, Bill was still able to change his mind.
The Buyer must part with possession and provide clear instructions to his own real estate practitioner (whether agency or customer service) before that same person is authorized in law to assume the other legal role and that was “agent” for the Seller.
The issue at hand is to determine at what point Bob "changed hats" and became the Seller's agent without any obligations to the Buyer.
Such, of course, is an issue with dual agency, multiple representation, and a customer service arrangements too.
Brian Madigan LL.B., Broker