Realtors Oppose Mandatory Sharing of Offers
Posted By: Rachel Kavanagh
May 16, 2019
Realtors Oppose Mandatory Sharing of Offers – Ontario real estate agents are lobbying the province against the mandatory disclosure of offers among competing home buyers in transactions involving multiple bids.
The Ontario Real Estate Association (OREA) sent a bulletin to its members that the province is considering this change as an update to the 2002 Real Estate Business Brokers Act (REBBA).
Buyer agents and listing agents have both voiced their opinions. One buyer agent indicated that this could have an impact on the market in two ways. A lower number of offers could result in the competing bids not offering as much as they would have intended. Saving the buyer money.
e.g. Property for sale at $1,000,000. Buyer 1 places an offer of $950,000. Buyer 2 places an offer of $925,000 and does not wish to go any higher. The seller accepts Buyer 1’s offer. Savings of $50,000.
While on the other hand, it could have the opposite effect. In a normal market where a property is in demand, the property could have multiple offers and the price could be driven upwards by conservative amounts resulting in the buyer paying above market value.
e.g. Property for sale at $1,000,000. Buyer 1 places an offer of $975,000. Buyer 2 places an offer of $980,000. Buyer 3 places an offer of $985,000. Each party goes back and forth 3x increasing their offer $10,000 each time. The seller accepts Buyer 3’s offer of $1,015,000. Buyer goes above market value by $15,000.
One listing agent interviewed mentioned that this would be very bad for sellers. If the competing offers were allowed to see what the other was bidding, the seller would lose all leverage in the negotiating process. The seller could no longer try and get the best possible price from the buyer, thus leaving potential dollars on the table.
The price of the property is only one variable being considered. In an open offer process, each party will be able to see the conditions and all the other details of the offer.
Privacy is a big concern should this process become mandatory. Sharing information about competing bids could lead to the disclosure of personal financial information to any interested parties. The government should not force consumers into an experimental, mandated open offer process. Buyers and sellers should have a choice. Tim Hudak, CEO of OREA indicated that making the disclosure of offers mandatory, “would be a radical change in the real estate market that does not exist anywhere in North America.”
Under the current rules, only a real estate agent can share the details of offers with the seller.
It is unclear the motive behind the suggested change, but if the process is mandated one party will end up losing out.
Realtors Oppose Mandatory Sharing of Offers written by Benczik Team Realty