Starting July 1, 2015, Ontario real estate brokerages acting on behalf of sellers will be required to handle real estate purchase and sale offers differently. Much differently in fact.
Real estate brokerages will now be required to keep a copy of all written offers (or an equivalent summary) that it receives for at least one year from the day it is received. At a minimum, the information that will be required to be maintained includes:
- The name and signature of the buyer.
- The name and contact information of the seller.
- The name of the buyer’s brokerage and their representative.
- The name of the seller’s brokerage and their representative.
- The address, legal description or other identifier of the property.
- The date and time the offer was made.
- The date and time the offer was received by the brokerage, and how the offer was received, such as in person or by fax.
- The date of presentation, if the brokerage presented the offer to the seller.
- The date and time, if any, until which the offer was irrevocable.
The changes stem from Bill 55, the Stronger Protection for Ontario Consumers Act, 2013 and will be reflected in new changes to the Real Estate and Business Brokers Act (REBBA) and Regulations.
Improving real estate Multiple Offer transparency
These new requirements will be music to the ears of all real estate buyers who flinch at the thought of bidding wars and competing offers.
According to a newsletter released by the Real Estate Council of Ontario (RECO), “the changes are intended to ensure the offer process is transparent, but it’s important to remember that the vast majority of real estate professionals conduct a fair and transparent offer process.” It can be inferred from this statement, that RECO acknowledges a very small minority of real estate professionals do not.
The most newsworthy portion of the announcement read as follows:
RECO is developing a process to confirm the number of offers that a property received. If you are representing a buyer that placed an offer on a property, you can request that RECO determine how many written offers the listing brokerage received for the property. The buyer or seller may also make this request to RECO directly. Upon such request, RECO may contact the listing brokerage to confirm the number of offers that a property received. RECO may also request documentation for each offer (either the entire offer or the summary document). The brokerage is required to provide this information to RECO upon request. RECO will only disclose the number of written offers received to the person who requested it. RECO will not release any detail regarding the offers, or identify the people who made the offers.
Furthermore, all offers that a listing brokerage receives must be retained, whether the property in question was sold or not. If no transaction occurred, the brokerage may retain the summary document instead of the actual offer, if it was submitted through a brokerage.
Holding real estate listing Brokerages and Realtors accountable
The offer process for buyers has been particularly stressful in light of the proliferation of competing offers during our extended bull real estate market in the GTA.
The genesis of many frustrated buyers can often be traced to the example situation where a buyer prepares an offer for registration and told there are no competing offers, only to be told one or more offers have been registered later that day or the next morning. At that point, many buyers will often question the possibility and the very existence of the offer which is otherwise known as a Phantom offer. While completely unethical and illegal per REBBA, the concept of a Phantom offer is one which is meant to create undue pressure on the legitimate buyer to improve a contemplated or existing offer.
Up until now, listing brokerages have only had to tell buyers how many offers are exist in a competing multiple offer situation. Depending on the listing brokerage, the individual buyer brokerages and representatives may also be disclosed upon request. More often than not, listing brokerages are opposed to such disclosure either as a matter of principal, administrative effort or a combination of both. Frankly, I think those listing brokerages are doing their sellers a disservice. What better way to establish trust and eliminate buyer scepticism in the hope of extracting an improved offer for your a seller?
While real estate brokerages will not be required to disclose any additional inf