How do you know there really is a bidding war?

Get your answer in one quick phone call

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The last home my husband and I bought was a run-down 1950s bungalow on a large plot of land in Toronto’s West Rouge neighbourhood. Occupied by a hermit (not a hobbit), the furnace had not been used in over a decade, the backyard was home to a dozen or more feral cats, and the attic was the neighbourhood raccoon flop-house. In short: it was a mess. But it was a mess with a great deal of potential. And we weren’t the only ones to see it.

As a result, four other families registered an offer in the first week the house was listed for sale. And despite my promise to never, ever, enter a bidding war, my husband and I found ourselves upping the ante on our final offer.

We won. But we also paid well over asking.

When relating this story to a friend, he immediately asked: “How did you know there were other offers?”

Not only was the question valid, it was vital.

Without bidding wars you wouldn’t have houses selling for $10,000 or even $100,000 over asking price. That means as a buyer you are dependent on your realtor to give you accurate information and practical advice. Get a bad realtor and you’ll probably get bad advice.

Enter: the telephone. Your solution to uncertainty.

Any time a buyer puts on offer in on a house, the buyer’s realtor has to ‘register’ the bid with the listing broker. In simple terms, your realtor is responsible for making your offer official by sending in the required paperwork to the office that listed the home for sale. By law, the listing brokerage must then notify any potential buyers (or their agents) that offers are registered on that property. One quick phone call to the listing brokerage and you’ll quickly know whether or not there are, indeed, registered offers against your dream home.

Keep in mind, however, that real estate offices are not open during holidays, and, despite answering services, real estate offices are not open 24-hours a day. If a buyer has stipulated that all final offers in a bidding war must be in before a listing brokerage is open, then you may not be able to get the information you require.

Still, checking up on registered offers with the listing brokerage is a great tool, particularly for buyers living in Calgary, Toronto, and Vancouver, where bidding wars have become the norm. It’s also a great way to determine if your realtor is doing their job by keeping you accurately informed.

(Before jumping down my throat let me emphasize: I’m not calling all realtors bad. In fact, I think there are some phenomenal realtors, who do outstanding work for their clients. But a few bad apples can spoil a bunch, and the unscrupulous actions of a few have forced all realtors to become transparent and to consistently and constantly set the record straight.)

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4 comments on “How do you know there really is a bidding war?

  1. Actually, the registration process is not mandatory in Ontario-while many agents do register their offers, many do not and many listing agents do not require it.. The only real way to protect yourself is with a properly worded clause that stipulates that the offer is being made on the understanding that other offers exist and that proof will be required after acceptance.

    Reply

    • Great tip Melanie! I’ll try to remember that on my next house purchase.

      Reply

  2. This article is misleading. At the negotiation stage, registration of offers with a brokerage is not required in Alberta. If you were to call a brokerage to inquire about the existence of multiple offers on any given listing, the receptionist who answers the phone would simply refer you to the listing agent…ie, the very same person who originally provided your agent with the information that there are competing offers on the property.

    Reply

    • Hi Jan,
      At the moment, there is no law to prompt real estate agents to formally register an offer. However in certain provinces, such as Ontario, many brokerages, agents and well-informed sellers, request or require “registered” offers. This means formal, written offers are submitted and logged in a file kept on the sale/potential sale of a home. This requirement has become common practice because of the prevalence of multiple offers and bidding wars. I’m not sure where you live in Alberta, but in Calgary and Edmonton (where bidding wars occur) this practice is probably established in some if not the majority of brokerages. Of course, this doesn’t stop unscrupulous realtors who misrepresent a deal in order to prompt higher bids or larger sale prices. For that reason, Ontario Minister of Consumer Services, Tracy MacCharles, introduced Bill 55: an attempt to amend the Real Estate and Business Brokers Act, 2002 in three basic areas, including formalizing the legal requirement to register all offers in writing. Of course, any changes in this bill won’t be legally binding in Alberta, but you can bet if it passes, we’ll see subsequent changes in other provincial jurisdictions. Until then, the best defense for any home buyer is to do their due diligence: interview your realtor and make your own phone calls.

      Reply

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