Home buyers caught in a bidding war will soon get a lot more protection against the use of phantom bids—fake or false offers used to initiate a bidding war or to drive up the sale price of a home.
Starting July 1, real estate agents can no longer indicate if there is an offer on a property unless a signed, written offer has been formally submitted to the listing brokerage office. Prior to these legislative changes, some realtors would notify home buyers of potential bids—bids that weren’t always forthcoming. (For more on tricks realtors use to sell homes go here.)
“The changes are intended to ensure the offer process is transparent,” states a March 2015 Real Estate Council of Ontario (RECO) bulletin.
Key to these changes is the ability to now request how many bids were actually registered against a property for sale. According to the RECO bulletin the regulatory council “will aim to determine the number of written offers as quickly as possible.” This could take up to two weeks but really depends on how quickly brokerages fall in line with this new process and how many requests are received for this type of information.
Under the new rules, brokerages will be required to implement new rules when it comes to handling offers. These new processes and policies will need to adhere to the following:
→ All offers must be signed in order to be valid;
→ The brokerage must keep a copy of all written offers it receives (or an equivalent summary
document for each offer);
→ The written offers (or summary documents) must be kept on file for at least one year from the day it was received;
→ All changes (through negotiations or amendments) must also be kept on file by the brokerage;
→ For unsuccessful offers, the brokerage may retain a summary document instead of retaining the original offer. (The Ontario Real Estate Association (OREA) expects to have a summary form in place by July 1, 2015, for this purpose.);
→ Buyers can now request (either on their own or through their real estate agent) from RECO how many written offers a brokerage responsible for listing a house for sale received for that particular property;
→ A brokerage must provide evidence of all written offers on a property.
This is will be welcome oversight for a home buying process that has become steeped in bidding wars and bully bids in recent years. This new regulatory process will ensure that the few bad apples that use unscrupulous selling techniques don’t hurt the overall image and reputation of the vast majority of realtors who conduct business in a fair and transparent manner.