Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

April 6th - 2003

Make multiple offers work

Multiple offers on houses in today's real estate market are not unusual and can be rewarding if everyone involved remembers the basic principles of fair play

Multiple offers on houses in today's real estate market are not unusual and can be rewarding if everyone involved remembers the basic principles of fair play and professionalism. REALTORS should know how to present competing offers in such a way that their clients are protected and other professionals and consumers are comfortable with the process. There are guidelines for multiple offer presentations in the RECO code of ethics, CREA code of ethics and, of course, each real estate board’s MLS rules and regulations. Multiple offer presentations are often part of heated, emotionally charged negotiations so it’s important to adhere to these guidelines and avoid any problems in the transaction.

The following excerpts from OREA’s Legal Pamphlet on Multiple Offer Presentations provide advice for REALTORS to handle competing offers effectively. Client awareness The best approach to the possibilities, benefits and risks of multiple offers is to discuss the various options with the sellers during the initial listing presentation. Advise them of your office policy on handling multiple offers and the sequence of presentations. Make the sellers aware of the possible pros and cons of these situations:

· If they accept one offer, the other buyers may look for another property. If this offer is a conditional one and the condition is not met, there may not be any transaction at all. · If they counter an offer in any manner, the buyer may wait until the last minute and decide not to accept that counter-offer. · They should never counter several offers, as there is the danger that several buyers may accept at the same time resulting in competing contracts and litigation. · If they reject all offers and advise all the buyers to reconsider their positions and bring their best offers at a specific time, some buyers may decide not to participate. REALTORS representing buyers should make their clients aware of the volatility of the market so that they can decide on their negotiation strategy. Buyers may decide to arrange financing and do property inspections in advance, forego chattels, make a higher than usual deposit, adjust the closing date or make other concessions that would make their offer more acceptable to the seller. Price may not be the only concern for the seller.

All clients should be made fully aware of the pitfalls of some “innovative marketing techniques” that are being attempted to take advantage of multiple offer situations. Inventive practices such as “sharp bids” or “creative price clauses” may be extremely dangerous and should not be considered without independent legal advice.

Codes of Ethics, MLS Rules and OREA forms The best assistance to guide you through a multiple offer presentation can be found in your real estate board’s MLS Rules and Regulations, Article 15 of the CREA Code of Ethics and RECO’s Code of Ethics, Rule 14 as well as the Guiding Principles of Rule 14. REALTORS must also ensure they present competing offers within the realm of buyer agency and dual agency. OREA’s standard form Listing Agreement and Buyer Agency Agreement can help in this area. For example, the OREA suggested Buyer Agency Agreement (formerly form 131, now form 300) has a specific provision about not disclosing the contents of offers to other clients. In this form, the buyer agrees “that the terms of any buyer’s offer, agreement to purchase or lease the property will not be disclosed to any other buyer.”

In addition, the dual agency provisions of both the OREA Listing Agreement (formerly Form 102, now form 200) and the OREA Buyer Agency Agreement provide that the broker shall not disclose to the buyer the terms of any other offer. All clients should be made aware of those provisions at the time of the signing of their agency agreements. Overall, REALTORS should extend a standard of fairness to all parties while maintaining the fiduciary obligations owed to their clients. Learn more Making a multiple offer presentation is complicated and the more knowledgeable a REALTOR is, the smoother the transaction will proceed. OREA offers continuing education courses on presenting multiple offers.

Check the course listings in the Continuing Education section of www.orea.com or your real estate board for details on upcoming seminars.

Be sure to also check out “Legal Forum” in the Members Only section of OREA’s website at www.orea.com to find answers to commonly asked questions about multiple offers (under topic: Offers, subtopic: Multiple Offers). The OREA Legal Pamphlet entitled “Multiple Offer Presentations” is also available online in the members only section. Dos and don’ts of multiple offers Enjoy the rewards of multiple offers and avoid the pitfalls by keeping the following in mind. DO: · Have a detailed office policy and review it regularly · Advise your clients of their choices. · Advise your clients of the other party’s choices · Tell other professionals the situation in accordance with the Code of Ethics and your client’s instructions. · Keep copies of all offers and counter-offers. · Make notes of any discussions and decisions. DON’T: · Have your seller client sign back offers without careful attention to the conditions that may need to be inserted in each offer. Sellers only want to sell their house once! · Show favouritism to your own buyer clients or buyer clients in your own firm. · Renegotiate your commission without advising everyone involved.

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Ontario Real Estate Association

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416-445-9910 ext. 246

Ontario Real Estate Association
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