You may have already read the story out of Toronto where buyers who believed they were involved in a bidding war paid $90,000 over asking – only to find out their offer was the only one. You can read the article here. In Ontario, this ‘phantom bid’ issue has been ongoing for years now.
The Calgary Real Estate Board has rules in place to help prevent this sort of occurrence from happening. That along with having a Buyer’s Agent that’s in tune with the market and acts as an emotional buffer during the bidding process will contribute to a pleasant transaction.
There have been a few times that after informing the Listing Agent that I have an offer for them, they tell me they “probably have another offer incoming.” My first question to them is: How many written offers do you have in hand? Verbal offers are absolutely meaningless and should be discounted entirely.
But what if the seller actually does have other written offers? It’s fairly common. Last month, 1 in 10 single family homes sold above asking price.
As a buyer’s agent, I always ask for the names of the competing agent(s) and their brokerage(s)
CREB’s rules and regulations state regarding competitive offers:
16.02 (4) In the event that the Listing Brokerage has more than one written offer to be presented, prior to any offer being presented, the Listing Brokerage shall inform the other competing cooperating brokerages of the existence of all other written offers and/or counteroffers, unless given a lawful written instruction to the contrary from the Seller. Unless instructed not to, when the Listing Associate is dealing with competing Offers, the names of the competing Buyer’s Associates and the Brokerage will be provided to the Associates representing the competing Buyers.
It’s true the seller doesn’t have to disclose there are multiple offers if that’s what they’ve instructed their agent. In that case, the offer proceeds as normal and the buyer isn’t tempted to up their bid.
If the seller chooses to disclose they have received multiple offers but has instructed the listing agent not to provide the names of the agents representing the buyers, it sends up red flags which I need to discuss with my client.
CREB’s rules and regulations also state:
Under no circumstances may the price or terms of a Purchase Contract which is under consideration be disclosed as a means of obtaining a better Purchase Contract from another party. The price, terms or conditions shall not be disclosed, except to the Seller.
Competing Purchase Contract(s) MUST be presented prior to the acceptance of any Purchase Contract by the Seller. Except for 16.02 (4), the Listing Associate shall ensure all Associates with competing Purchase Contracts are notified IMMEDIATELY of the current status of Purchase Contracts, before and after the presentation.
In the multiple offer situations I have been involved in, the listing agents have all been professional with disclosing the relevant parties involved and timely in reporting back the status of our offer.
To both the agents and buyers out there in Calgary, what has been your experience with multiple offers?