109
SUMMER
2015
|
Every industry has rules
that it must liveby andagov-
erningauthoritywhose raisond’etre is to interpretand,whennecessary,
enforce those rules. In the caseof theOntario real estate industry,we
liveby the Real EstateandBusiness Brokers Act (2002) or REBBA for
short. REBBA is administered by the Real Estate Council of Ontario
(REC0). Wearen’t thearmy. I ll leave theacronymsat that.
RECO’smain function is togovern theorganized real estate industry in
Ontario. In that capacity, RECO is the receptacleof publiccomplaints
about the industry, and trust me, they takepublic complaints very seri-
ously. I had theopportunity tohear theheadofRECO’scomplaintsde-
partment speak recently. He indicated that thenumber one complaint
that they receive from thepublichas todowithoffersand fairness in the
offerpresentationprocess.
We shouldnot really find this surprising. Thepressureof limited supply
and seemingly ever-increasingdemand inmany of our province’s pri-
mary realestatemarketshavemade theonce rarephenomenonofmul-
tiple offers commonplace. There are 2 constants in amultiple offer
situation. Once theprocess iscomplete, there isalwaysawinner, and,
as a result, there is always a loser. In
manycasesmore thanone.
Even if theoffer process is completely
equitable, thepartyor parties that did
notwinout in their bid toacquire their
dream home can be left to feel disad-
vantagedby theprocess. In fact,many
times it can be the successful bidder
that finds faultwith theprocess. While
I believe that far more often than not
the process is totally equitable there
havebeencircumstances thathaveob-
viouslywarrantedacomplaint.
Probably themost common complaint
we see from the sideof theunsuccess-
ful bidder isoneof fairness. Was their
offer presented in the best possible
light? Was it presented at all? Was
the successful offer brought by the list-
ingagent? Did the listingagent’soffer
have an advantage over my offer?
These are all completely legitimate
questions.
REBBAallowsa listingagent to representaBuyer inaddition toaSeller.
However, ina casewheremore thanoneoffer is present, theoptics of
this practice are horrible unlessmanagedproperly. It is bad enough
whenaparty loses out onahouse that theywanted, butwhen the suc-
cessfulofferwas representedby the listingagent, the temptation to think
that therearegamesbeingplayedcanbeoverwhelming.
Theonus is thereforeon the listingagent tocreateanevenplaying field.
Sealedoffers deliveredat a specific time, theability for competitors to
present theiroffers inperson,and the listingagentpresenting theiroffer
first rather than lastareall strategiesemployed routinely to removeany
perceivedadvantage.
Somebrokerages (includingours) take thisastep further. WhileREBBA
allows it,wehaveabrokeragepolicy that forcesamemberofour team
tocompartmentalize theprocess if inamultipleoffer scenario. Ifa listing
agent has aBuyer for their own listingandwe havea reasonable ex-
pectationofmultipleoffers,weask the listingagent tohandover either
theBuyer or theSeller toacolleague, removinganyperceivedoppor-
tunity for advantage. I use thewordperceivedadvisedly. I really do
not think that anyoneonmy teamwouldact inan inappropriateway.
Thispolicy ismostly toprotect them frombeingaccusedof impropriety
where none likely exists. As I said, the perception that one party has
beenadvantagedoveranother isoftenenough to inviteanaccusation.
Themain thing is communication. Aconciseplan for dealingwithmul-
tipleoffers that hasbeencommunicated toall parties inadvance is the
key. Everyonehaving the sameexpecta-
tions, and then thoseexpectations being
delivered on is the key component to a
fair and transparent multiple offer
process.
The primary complaint heard by RECO
from successful bidders after the fact re-
volves around theactual presenceof of-
fers. In many markets, consumers
complain of “PhantomOffers”. This is a
scenario where an unscrupulous listing
agent may indicate that they have an
offer on apropertywhere none exists in
order togalvanizeapotential Buyer into
increasing theiroffer. Inanother iteration
of this scenario, a listingagent might in-
flate the number of offers they say they
have. For example say that there are5
offers registered on a property when
there is, in fact, onlyone.
The offending listing agent would likely
say that this isa legitimatestrategy forget-
ting thebest possibledeal for their Seller. While there is nodoubt that
aprimaryobjectiveofanygoodREALTOR
®
shouldbe tomaximize the
return for theirSeller, thiscannotbedoneat theexpenseof theconsumer
at largeby basically lying toadvantage their client over the clients of
other REALTOR
®
.
TheOntariogovernment, inagreementandnot totally satisfiedwith the
rules or enforcement measures that existed, brought forwardBill 55 in
2013. TheStrongerProtection forOntarioConsumersAct. The2main
take-aways from this law that took effect July1st, 2015governwhat
constitutesanofferandwhat thebrokerage’sobligationsare toensure
(andprove) that fairness isparamount in themultipleoffer format.
DesmondvonTeichman
Broker of Record, Owner, Royal LePage
LocationsNorthRealty, Brokerage
MARKET
watch
Probably themost common complaint we see
from the side of the unsuccessful bidder is one
of fairness. Was their offer presented in the
best possible light? Was it presented at all?
Was the successful offer brought by the
listing agent? Did the listing agent’s offer
have an advantage overmy offer?
These are all completely legitimate questions.
By
ESCARPMENT
®
real estate
