How to Handle Bidding Wars Legally

Ultra-competitive housing markets have fueled bidding wars as buyers frantically compete for a limited number of homes for-sale. Real estate professionals are finding themselves helping their home-buying clients navigate multiple offer situations. But they must be careful to avoid misunderstandings and reduce the risk of discrimination in the process, too.

“Real estate professionals can help avoid complaints and fair housing issues while helping both the buyer and seller understand their options,” Deanne Rymarowicz, associate counsel at NAR, says in a new “Window to the Law” video posted at

Rymarowicz highlights three principles for real estate professionals to follow when navigating multiple offer situations:

Be mindful of your legal and ethical duties. Your state likely has laws and regulations regarding timeframes for presenting offers and what needs to be disclosed to the other party in a multiple offer situation. Some states, for example, prohibit revealing the terms of a buyer’s offer without the buyer’s consent. The REALTOR® Code of Ethics also speaks to handling multiple offer situations, such as requiring that REALTORS® “protect and promote the interest of their client” in multiple offer situations.

Watch for potential fair housing red flags. “Buyer love letters”—letters, videos, and photos given to the seller from the buyer expressing their desire for a home—could possibly lead to some fair housing violations. “These ‘love letters’ often innocently include personal information that reveals a prohibited basis for discrimination, such as ‘we can see our family celebrating Christmas around the fireplace’ or the ‘wide hallways will accommodate my wheelchair,” Rymarowicz says in the video. Fair housing centers on eliminating discriminating and “love letters” could potentially cause an implicit bias. “Accepting an offer based on anything other than the price, terms, and merits of the offer might violate fair housing law,” Rymarowicz says.

Let the client make the decision. Educate your client about multiple offers and strategies for responses. “You may even offer suggestion and advice based on your knowledge and experience,” Rymarowicz says. But ultimately, “it’s up to the client to decide what offers and counteroffers to negotiate, reject, and ultimately accept.”

View more tips for handling multiple offers, without putting yourself at legal risk, by watching the video below produced by NAR’s legal team.

Source: REALTOR® Magazine