REALTORS® must abide by strict rules when it comes to presenting competing offers to the seller. These rules are meant to protect all the buyers and to ensure that all the buyers are given a fair chance in competing for the house.
Below I have highlighted some essential rules that real estate agents must follow when presenting and dealing with competing offers. If you are in the market looking for a home, it is essential that you understand how the competing offers work as you will likely be submitting a competing offer at some point in your home buying journey.
Before we get started, I want to highlight the following points:
Where the buyer is represented by an agent, any communication with the buyer will be done through the selling agent and in the case of an unrepresented buyer, the communication is done directly with the buyer. The agent representing the seller is known as the listing agent. For the sake of simplicity, I will refer to the buyer’s agent as the buyer’s agent and the seller’s agent as the seller’s agent.
For more and detailed list of all the rules, please visit http://mbrealestate.ca/law-policy/policies-legislation/policies-directives/offers-dir.html
Presentation of Offers
Offers are to be opened in the physical presence of the seller if they are submitted in the sealed envelope. If offers are opened in some other matter, the buyer’s agent or the buyer must be advised.
Competing buyers must be advised that they are in competition in the timely manner upon the receipt of the second offer by the seller’s agent. The buyers must be given an opportunity to amend their offer if they choose to do so.
The seller’s agent is not obligated to continually update the buyer’s agent or the buyer every time another offer comes in however the buyer’s agent or the buyer can request that information and the seller’s agent is obligated to provide number of offers received in that point in time.
In the case that the buyer is no longer in competition, the seller’s agent must inform the buyer’s agent or the buyer of this fact.
If the seller’s agent or anyone from the seller’s agent’s firm is writing an offer, the competing buyers’ agents or buyers must be advised of this fact.
The seller’s agent is not obligated to disclose the identity of competing buyers/buyers’ agents, however must do that if asked by the buyer or the buyer’s agent.
The seller’s agent must request a sign off from the seller on rejected offers noting that the offers were presented and declined by the seller. If the seller refuses to sign off on the offers, the seller’s agent must provide his/her own signature.
Communication with Potential Buyers or their Agents
The seller’s agent must not disclose any details of the competing offers in their communication directly or by implication.
Examples of unacceptable communication are:
– “your offer is within $xxx of the best offer”
– “your offer is identical to another offer”
– “if you increase your offer by $xxx the house will be yours”
– there are xxx (number) of offers within a range of $xxxx”
– “your offer is second in price”
As a general rule, a registrant (acting on a seller’s instruction) may only accept, reject or counter an offer, and do so in writing.
Limited degree of communication seeking “clarification” or “pre-qualification” is allowed. The seller’s agent can communicate with the buyer’s agent or the buyer to seek clarification of the terms of the offer if unclear or enquire whether the buyer is flexible on a particular term (e.g. possession date). In doing so, the seller’s agent must be precise in noting that they are not communicating a counter-offer, but are merely going through a pre-qualification or clarification exercise. Likewise, there is no guarantee that a seller will issue a counter-offer, or select the offer for further consideration, once the presentation process begins.
The seller’s agent must communicate with all the buyers or their agents to advise whether the offer has been rejected or is being considered further “pending”. The seller may choose to enquire if some of the potential buyers wish to change their offers.
The seller’s agent must keep a list of offers presented to the seller and must provide a copy if requested by the buyer or the buyer’s agent.