Behind the Scenes of Ontario Bidding Wars

I lost out on a home in a bidding war. How do I know my offer was presented to the buyer?

When you’ve found a home you want to buy, it can be frustrating to lose out to another buyer in a bidding war — also known as a competing offer situation. In Ontario, there are specific rules for how the process is handled in a competing offer situation.

Notably, the seller’s representative is required to provide all written offers to their client as soon as possible, unless the seller provides written direction that states that they want to be presented with offers on a specific date.

In most cases, sellers do this to obtain more exposure for their home before offers are made, and often they hope that it will lead to a competing offer situation. It’s kind of like announcing the launch date of a new movie or book to generate some interest before it’s available. This also gives would-be buyers a certain number of days to consider the property.

For the benefit of readers who haven’t been through a competing offer situation, I’d like to go over the basics of how the process works.

There are certain pieces of information that the seller’s representative has to provide to buyers, and potential buyers who inquire, in a competing offer situation. This info could be useful when you are preparing your offer:

  • The number of offers that have been submitted;
  • Whether any of the buyers are represented by the same brokerage as the seller;
  • Whether there are any agreements or offers to alter the commission rate if a certain buyer’s offer is accepted.

Sellers represented by a real estate brokerage take offers in a closed bidding situation, so you won’t know how much other buyers offered, or any terms they included in their offers.

To make a bid, you typically consult with your real estate representative to put together your best offer, and hope for the best.

Once you’ve made your offer, the seller can choose to accept it, reject it, or make a counter offer. Sometimes a seller will give one or more buyers a chance to “improve” their offer, but you might only get one chance. It’s important to note that sellers don’t have to acknowledge the offer at all, if they don’t want to.

If you’re entering a competing offer situation, it’s critical to keep your emotions in check. Before making an offer, make sure you understand how much you can afford. Once you know your maximum price, stick to it. You should also think carefully before waiving conditions like a home inspection. By planning ahead, you can prevent regrets later on.

If you are concerned that the offer process was not conducted fairly, you or your representative can ask Real Estate Council of Ontario (RECO) to confirm how many offers the seller’s brokerage received. RECO will contact the seller’s brokerage and ask for supporting documentation for each offer.

You won’t find out any details about the offers — only the total number received. But this can give you some peace of mind about the bidding experience.

Originally posted by: Joseph Richer, Registrar, Real Estate Council of Ontario via the Toronto Star

 

 
Sean Mayers

Sean Mayers

Sales Representative
CENTURY 21 Regal Realty Inc., Brokerage*
Contact Me

Tags