Is it legal—or ethical—to send out multiple contracts when selling?
Is it wrong to send out multiple contracts at once when selling your apartment?
The answer depends on whether you're approaching it from a legal or an ethical basis, according to our experts.
Contracts are not considered final until they're signed by both parties, so sending out multiple contracts—whether or not you let the prospective buyers know you're doing so—is legal.
"It is not 'wrong' per se to do so, but it can lead to some level of ill will," says Jeffrey Reich, partner at Schwartz Sladkus Reich Greenberg Atlas LLP.
And no wonder, since prospective buyers may have already spent money on attorney fees and undertaken the paperwork, only to find out that the apartment they were envisioning themselves in has been sold to someone else.
Nevertheless, in the realm of New York real estate, where low inventory can mean fierce competition, it can be tempting to remain open to better offers.
Bruce Cohen, founding partner at Cohen & Frankel LLP, agrees that sending out multiple contracts can get you into ethically murky territory.
"It's not necessarily the right thing to do unless everyone knows you're doing it," he says. If you are fielding more than one offer, and a higher one comes in, he adds, "At the very least, the first person should get the right to match it."
Of course, disclosing to prospective buyers that you're sending out multiple contracts could put them off the deal entirely. Some sellers may feel that it's their right to broaden the playing field, since buyers can bid on more than one property at a time, but the two situations are not equivalent, according to Deanna Kory, a broker with Corcoran.
"The painstaking negotiation process and acceptance of terms, and the subsequent engagement of an attorney by the buyer to conduct the negotiations and due diligence, should be considered an act of good faith on the part of the buyer," she says. "Unless there are actions to indicate that the buyer is truly wavering on their commitment, it is common that the seller stick with sending a contract out to one buyer at a time and give them a certain time frame in which to sign."
Under certain circumstances, though, it may be in your best interest—and not unethical—to send out more than one contract at once, as long as you provide full disclosure to the would-be buyers.
"It may be necessary for of a variety of circumstances," says Shirley Hackel, a broker with Compass. "The contract may be out for too long; a problem related to the property may arise during due diligence; an issue regarding financing may be too time-consuming to overcome; a higher offer with better terms from a more qualified buyer may surface."
That said, as a broker, Hackel says that sending out multiple contracts can be bad for business.
"Without a doubt, we are fiduciaries to those who employ us, and we may not share privileged information," she says. "However, we also have certain obligations to our co-brokers who are also essential to our business. Establishing strong alliances with other agents is arguably as important as developing trustworthy relationships with our buyers and sellers."
Trouble at home? Get your NYC apartment-dweller questions answered by an expert. Send us your questions at [email protected].
For more Ask an Expert questions and answers, click here.
You Might Also Like
