In the ever-constant discussion of the real estate market in Toronto, two topics come up more often than not — bully offers and real estate agents double ending on deals where they represent the buyer and seller.
So we sat down with some industry insiders from real estate agents to the registrar of the Real Estate Council of Ontario, the body responsible for regulating real estate professionals on behalf of the Ontario government, to see what they had to say.
1) If a listing agent fails to notify all other interested buyers when a bully offer has been submitted, what are the repercussions?
The regulations are very clear on this point—if a bully offer comes in and the seller is considering it, the seller’s representative has to notify everyone who has expressed an interest in the property, in writing. An interested party could be somebody who has viewed the property, booked a viewing appointment, submitted an offer, or expressed their intention to submit an offer. Sellers typically use delayed offer presentation as a way to generate interest in the property. So, it is in the seller’s best interest to inform potential buyers of any change in the offer presentation process so that they have an opportunity to submit an offer as well. When we receive a complaint about a real estate professional that has not followed the required procedures around this, or that has made any other breach of the law, we take appropriate action. Depending on the severity, this could lead to a warning, an educational course, or a fine of up to $100,000. In extreme cases, we will revoke the individual’s registration, meaning they can no longer trade in real estate.
— Joseph Richer, Registrar of the Real Estate Council of Ontario
2) Do you think that bully offers have played a role in creating the frenzy that is the Toronto real estate market?
Bully offers do not necessarily fuel price increases, and I would not say these alone are responsible for the levels of appreciation Toronto and the GTA are currently seeing. From experience, a bully offer is not always the best offer; I would say roughly 70% of the time a seller can get a better price by waiting for offer night. Sellers accept bully offers because they’re nervous, and although the same price or higher cannot be promised on offer night, it more likely than not will come in. Bully offers may have not independently fueled the levels of appreciation we are seeing, but they have added to the increased stress surrounding home buying. Buyers are often placing offers within hours of the first time they have seen a home, and need to be ready to jump at a moment’s notice in the event a bully offer comes in on a home they are interested in.
— Nicole Harrington, Real estate agent at Realosophy and Founder of SheSellsToronto.com
3) What are the rules that realtors must follow when they are representing both the buyer and the seller?
It’s important to remember that the rules for multiple representation apply at the brokerage level, not just to the individual salesperson. So if the buyer and seller are working with the same brokerage, it’s considered multiple representation, even if the buyer and seller are working with different representatives. There are very specific disclosure rules that the brokerage has to follow. First of all, before they begin to represent a buyer or seller, they must inform them that multiple representation could arise, that consent in writing is required, and describe the type of services and service levels that the brokerage would provide in multiple representation.
When the multiple representation situation does arise, the brokerage must tell all buyers and sellers that they intend to represent multiple parties, and provide a full explanation of how the brokerage’s obligations to promote and protect each party’s interests will differ compared to if they only represented one party in the trade. Before multiple representation can proceed, all parties must provide written consent. If one of the parties does not consent, then the brokerage must release one of the consumers to seek alternate representation. Last year, we prepared a fact sheet on the pros and cons of multiple representation. There’s key info there for consumers who are concerned about the issue. If a real estate professional is not following the rules, we urge consumers to file a complaint with us so that we can investigate the matter, and take appropriate action.
— Joseph Richer, Registrar of the Real Estate Council of Ontario
4) Do you feel a real estate agent can fairly represent both a seller and buyer for the same listing?
Absolutely not. It's impossible for one sales representative to represent opposing and competing parties. If a seller is uncomfortable with their listing agent also representing a buyer in an offer situation, they simply don't have to agree to it. For me it's about education, the seller and the buyer must be fully informed of their options and rights and I mean fully informed before any ink hits the paper. There can be no room for confusion, doubt or second guessing.
— Pat Simmonds, Broker at RE/MAX Hallmark Ltd., Brokerage
5) What are your view on real estate agents double-ending and working with both the seller and a potential buyer for the same listing?
There’s no issue with an agent representing both buyer and seller, so long as it is handled properly. At my brokerage, the agent has his or her client sign an offer, and place it in an envelope, for a manager to present to the seller – but most importantly, that offer is presented first, before any competing offers. This practice is very rare in the industry, however.
— David Fleming, Broker at Bosley Real Estate Ltd., Brokerage
