With inventory continually low, you’ll likely find yourself in a multiple-offer situation. It might even feel like the multiple-offer mayhem hasn’t given REALTORS^® a break since members first started to see the trend in 2021. These situations can be stressful for everyone involved, and it’s one of those stand-out situations when REALTORS^® get to show their worth as they help clients negotiate multiple offers.

Here are a few tips to keep in mind when your clients are involved in multiple-offer situations:

1. Get your client’s instructions

Listing agents are required to present seller(s) with their options when facing multiple-offer situations. Fully explaining the benefits and drawbacks of different options is essential to fulfilling fiduciary obligations. Additionally, this allows the seller to make an informed decision about how they would like to proceed should they receive multiple offers on their property. Once your seller decides how they want you to manage multiple offers, get their instructions in writing. If they change their multiple offer strategy, get their new instructions in writing.

When representing a buyer, explaining a multiple-offer situation and exploring your client’s comfort level around these situations is also important. Some buyers aren’t interested in a “bidding war,” and knowing this helps buyers’ agents customize their client’s purchasing experience.

For more information, check out this Real Estate Magazine article: Fear of multiple offers syndrome.

2. Making sense of multiple-offers rules.

RECA states, “The seller determines the process, including whether they want to disclose the multiple-offer situation to potential buyers.” CREB^® aligns with these rules to ensure members avoid contravention of RECA’s legislative requirements and multiple-offer expectations. For more information on the CREB^® Rules related to multiple offers, review Part II 11.03, 11.04 and 11.05.

When listing agents are in a multiple-offer situation, they are still required to respond to member questions (CREB^® Rule Part I 4.04) and to act honestly. Depending on the seller’s written instructions, this may include a response stating, “My client has instructed me not to answer this question.”

3. Crafting an offer

After having the necessary conversations with your buyer, strategically constructing the offer is important. Things to keep in mind:

• Risks. If buyers are submitting unconditional offers, we recommend reviewing your brokerage policies and reaching out to your broker for guidance. This may protect you and your brokerage from any potential liabilities for representing an unconditional offer.
• No inspection? Have protection. Writing an offer without an inspection condition should be carefully considered. As part of their fiduciary obligations, REALTORS^® must explain the potential implications of not including inspection conditions to their buyers. REIX, your errors and omissions insurance provider, suggests presenting buyers with the inspection options and having them acknowledge in writing that they will proceed to submit an offer without an inspection condition. You can use the Property Inspection Report Request Form to assist with this conversation.
• Knowing the lending conditions. Some lenders will not fund mortgages where buyers have offered excessive amounts over market or appraised value, and clients could be responsible for coming up with additional cash to close. To learn more, check out this Globe and Mail article: Buyers in a bind when appraisals don’t match sale price. We recommend advising your buyers to check with their lenders about the terms of their pre-approval.

4. Do’s and don’ts

Do remember to ask questions to the listing agent before submitting offers, such as:

• Are there any other offers received, expected or in progress?
• Will your seller look at our offer immediately or at a scheduled time?
• Please ask your seller if they will advise us, through you (the listing agent), if they receive any additional offers.

Don’t expect everything to go in your buyer’s favour.

• Prepare your clients for unexpected outcomes such as undisclosed multiple offers and sellers changing their minds about how they will deal with multiple offers.
• Be in a good headspace to remain professional when the situation gets stressful. Your buyers might be frustrated or upset, and you must stay calm and clear-headed to help them move through the situation.

Please remember that all REALTORS^® are working for their clients. Although clients (and sometimes agents) are looking for someone to blame when an offer doesn’t go together, keep your composure. Please, don’t take out your or your seller’s frustrations on the other agent; they’re just the messenger.

4. Purchase terms should be clear and unambiguous

• Bully offers. The trend where buyers submit offers with a purchase price of “$2,000 more than the highest competing offer.” Although this might sound like a competitive edge for buyers and a great deal for sellers, it is risky and ill-advised, according to REIX.

• The transaction could fall apart if an offer like this commits the buyer to more than they can afford. Getting a non-waiver on a financing condition is usually not the desired outcome for the seller.
• Substantiating the “highest competing offer” will be challenging, and most buyers will want confirmation to prove what their offer is beating. Some contract terms may require that a copy of the highest competing offer be provided. However, providing personal information to another party for purposes that were not intended can have implications under privacy legislation.

We recommend that you and your clients seek a legal opinion before putting forward or accepting purchase contracts such as these.

Learn everything you need to know about drafting effective residential purchase contracts to protect you and your clients. Join Jeff Kahane at CREB^® on August 2 for Residential Contracts Line-By-Line. Register here for this complementary session!