(Toronto Market 2021)
The Toronto resale housing market is relatively “hot”. There is a shortage of supply, and quite a few “buyers” for every property.
From the perspective of the Listing Agent, this can present quite a challenge on “Offer Day”.
Frequently, the property will be listed on MLS, the property will be available for showings for several days to permit an opportunity for everyone who has a genuine interest in the property to see it.
The “Offer Date” will be published as well as the time. For example: “offers will be gratefully accepted at 8:00 on Tuesday”.
Legal Notification Requirement
There is an obligation imposed upon Listing Agents in such circumstances to disclose:
- The number of Offers,
- But, not any of the terms.
This notification is to be provided to everyone who is making an Offer, essentially, that means the Buyer himself. In the case of those Buyers who are represented, then that notification would go directly to their agents.
This is the provision in the Code of Ethics:
26. (1) If a brokerage that has a seller as a client receives a competing written offer, the brokerage shall disclose the number of competing written offers to every person who is making one of the competing offers, but shall not disclose the substance of the competing offers.
(2) Subsection (1) applies, with necessary modifications, to a brokerage that has a seller as a customer, if the brokerage and the seller have an agreement that provides for the brokerage to receive written offers to buy.
On Tuesday, everyone who has an Offer should know the number. That’s easy when all three Buyers surface by 10:00 am on Tuesday.
However, this is Toronto and the market is very “busy”. Unless the property is an “overpriced dump”, there should be several Offers. But, how many, and when did they come in?
Easily, there could be twenty Offers. When Offer #20 comes in, you can say “you’re one of twenty”. The next step is to contact the other 19. You will also appreciate that occurred with each Offer, other than the first. That’s a lot of phone calls! And, all within a three hour stretch!
Now, it would be easy enough if all the calls were spread out evenly throughout the day. They are not, they all surface within the last three hours.
One other issue is the fact that the Listing Agent cannot refer or make reference to an Offer unless it is actually “received”. That means, the Buyer’s agent has indicated that they have a signed offer in their possession for presentation.
All of this indicates that there are going to be a lot of last minute phone calls.
Delegation to a Receptionist or Assistant
If the Listing Agent has an Assistant, delegating the task of updating the numbers should immediately be assigned to them. The problem is that Buyers’ agents will call the Brokerage, speak to anyone on reception, the Assistant, and/or the Listing Agent. All of these calls will take place within the last couple of hours. So, who is going to make all those outbound calls?
It could be somewhat risky to use the receptionist at a busy brokerage. The larger brokerages will have several people answering the phones, but rarely will they be in a position to place the outbound calls. It could be hectic if several agents have Offer Presentations at the same time, or even on the same day.
Keeping track of the accurate count among three people, the Listing Agent, the Assistant and the Receptionist is going to be difficult at best.
As the count increase, some will withdraw. There’s method to their madness, they don’t want to unnecessarily bid up the price, because they believe that they may be competitive for the next house.
Advice to all Listing agents
Make sure that you inform all of the potential Buyers what method you are going to use to keep them advised of the count. If you don’t, this is a great way to face a disciplinary proceeding and be hit with a $5,000.00 to $10,000.00 fine.
Personal Phone Calls
If the numbers are low enough, this would be the “gold standard”. Everyone gets a personal phone call advising them of the count, directly from the Listing Agent.
Mass Emails by Blind Copy
This works and is manageable for groups of 10 to 15. Each time there is an Additional Buyer, an email goes out to the group advising of the new number. Larger brokerages will often employ this method.
This method of notification can work when things get fast and furious. You would record the count on a webpage for all to see. From the Buyers’ agents’ perspective, it is simple and straightforward. All they have to do is “refresh the page” from their mobile phones. If they were to call the Listing agent, that agent could be tied up with 19 other people, so the call’s going to voice mail.
The Listing Agent can manage this by going into the backend of the website on their mobile device, or alternatively, if they have an Assistant, have that person update the website on a computer.
Dates and times of entry and notification are there for all to see. No one can complain about preferences being given to others.
What to Say
On the webpage, which could be a blog on your own site, or a dedicated page, or even a page on a website dedicated to this particular listing, you should include the following:
123 Main Street- Offers 8:00 pm Tuesday, xx February 201x.
Number of Offers Received
4 Offer, Listing Brokerage, no collateral agreement
8 Offer, Listing Agent, Co-op % reduced by 0.5%
Numbers 10 and 14 have withdrawn
Current Number: 18
Using this type of presentation format will ensure that there is no confusion about the numbers and that if one person withdraws, then that is noted. Also, it avoids duplicates, since every “received” Offer is assigned its own number.
Many complaints are associated with the number count and particularly the running tally, when someone withdraws.
You will also notice that there are two Offers which possibly have the “inside track”. One Offer is another agent at the Listing Brokerage. This information needs to be communicated in writing. A phone call won’t do. So, here it is.
The second Offer in contention is from the Listing Agent and there is a one-half percent advantage. This collateral agreement needs to be disclosed including particulars of the extent of the reduction.
An Offer is received if its existence is communicated in writing to the Listing Agent by:
- Personal delivery
- email, or
As a Listing Agent you may rely upon the underlying truth of the communication. But, that communication has to be in writing. Verbal statements are insufficient.
The communication may be as short as “I have an Offer for you” by TEXT, if you understood from whom it was sent and to which property it applied etc. The Buyer’s representative could also refer to having an 801 Form completed. It could be sent and that also would be sufficient. Even a short text to the effect that there was an 801 signed would work.
Remember, that the key aspect to the Offer being received is:
- the Offer exists, and
- the Listing Agent has written notice of the Offer’s existence.
This is, of course, quite different from “registration” of an Offer. In that case, a phone call or other verbal assurance could be made and arrangements made for presentation. This “registered” arrangement takes place without a real Offer having been signed. The Buyer’s representative proposes to have it signed later in the day but wishes to be advised, so that they will be in the loop.
It is not proper to include this Offer in the count until it goes from being “registered” to being “received”.
If you run into problems here, don’t hesitate to retain a Barrister, Solicitor or secure the advice from a lawyer on this point.
Brian Madigan LL.B., Broker