”Bidding wars” or, competing offer scenarios/situations, are commonplace in various areas of Ontario.
From July 1st, 2015, in Ontario, real estate agents are under new rules governing how to handle offers. The provincial government has enacted these rules to create more transparency in the overall real estate law. There are a few particular pieces of information that a seller agent’s brokerage are required to provide to prospective buyers in the midst of a competing offer scenario:
1. How many offers in total have been submitted.
2. Whether any represented buyers are represented by the same brokerage as the seller.
3. Whether the selling agent’s brokerage has a reduction of commission agreement for buyers who are being represented by a certain brokerage.
Sellers who are represented by Ontario-based real estate brokerages take offers in a closed bidding environment; so you & your client won’t know how much other buyers are offering, or any special terms included in their offers.
In making a bid, you as the real estate agent puts together your clients’ best offer – and then must hope for the best. Then the seller chooses to accept the offer, completely reject it, or reply back with a counter offer. The Seller will sometimes give one or more of the interested buyers a chance to ‘improve’ their offer, but typically your client only gets one chance.
When there are more buyers than sellers, when the market is hot – it is understandable that buyers can become frustrated; especially if they already submitted unsuccessful offers on several homes. Buyers may want to know how many other offers the seller actually received. The new rules that recently came into effect, on July 1st 2015, enable a way for buyers to receive such information.
The Ontario government has decided that all offers: 1) need to be in writing and signed, and 2) the seller’s brokerages now needs to keep records of all the relevant offers on file for 1 full year.
How can that be helpful to you and your client? Well if you are involved within a competing offer scenario, RECO – The Real Estate Council of Ontario www.reco.on.ca can be contacted to make sure that the offer process was conducted fairly. You or your client can request RECO to find out how many offers the seller’s brokerage received.
RECO will contact the seller’s brokerage for you, and may also ask them for documented particulars for each offer. When RECO has determined the number of offers, as soon as possible, they will send you that information. You will not find out any otherwise secret details about the offers – only the total # of offers received by the seller and their brokerage.
This new rule provides some measure of extra assurance to buyers, but our advice for multiple offer scenarios is: 1) carefully think before waiving conditions such as a home inspection, and 2) plan ahead so you know how much your client can afford. Knowing you client’s maximum price and sticking to it, makes for less chance of regret later.
