In a recent article, I addressed the state of the market in Ottawa. The pundits says Ottawa is a seller’s market and that means that there is a good chance that you may not have the only offer being presented to the seller.
The saying goes that the true value for any given property is that which an informed buyer will pay absent of duress. The real question is, does a multiple offer situation create that duress, or is it simply a mechanism to manage buyer demand.
Sometimes, we see properties that are listed with a date stated for offer presentation with no opportunity to present (or convey in any manner) offers prior to that date.
Sometimes, this is a method to create artificial duress, and sometimes it truly is a way to most effectively manage the needs of the buyer pool. If we say that informed buyers won’t be swayed by the artificial duress, then we can focus on the why behind the effective management model.
No conveyance of offers before <date> <time>
Can be a fair way of allowing prospective buyers to see the property, perform due diligence on the property (financing / home inspection etc) and know that they will be presenting on a level playing field on the specified date.
There are pockets in Ottawa where this is happening using a model where everybody shows up to the same location and each buyer has their offer presented. In this model, it is easy to see that indeed there are other offers and if yours is the winning offer it is reasonable to believe that the other people there were in fact presenting offers on the same property.
However, what about the situations where an offer seems to show up out of the blue?
You find the home you want and you put in an offer believing that yours is the only offer the seller is considering. Great! Then comes the phone call that your REALTOR® really doesn’t want to receive.
“Hi Jim, it’s Kelly calling. Thank you for the offer you sent. I am calling to let you know that we just received another offer on the property.”
How do you know that there really is another offer?
We (as an industry) are coming up on the July 1st anniversary date of the implementation of the process that was designed to address this exact situation.
When a listing brokerage receives more than one offer on a property, the brokerage is required to notify the buyers involved what the competitive field looks like for the property. How many offers, if there are any commission reductions offered that accompany any of the offers, and if any brokerages are representing more than one client.
Along with this process, the brokerage is required to maintain records about each offer involved. This allows the public to make inquiries into a specific offer process that can give the buyer confidence that there were in fact other offers in play without actually knowing what the content of any of the other offers.
Click here to see what the Real Estate Council of Ontario has to say about Competing Offers