Is a Back-Up Offer to a Conditional Agreement a “Competing Offer”?

Question:

If there is a conditional offer on your listing from Buyer Agent A and it has been negotiated and it is in the conditional period with no escape and you receive another offer from Buyer Agent B for a “back up” offer.

  1. What are the duties owed to Buyer Agent A?
  2. Is it any different when they submit an amendment asking for the extension of their conditions?

Answer:

1) you do not have competing Offers,

2) now, you have competing Offers, one is a straight purchase and the other is the Offer to Amend.

Issue of Concern

The difficulty is that the Regulator, RECO has stated to some registrants in writing that in scenario #1, we have “competing Offers”. While I personally disagree with that view, it is still the Regulator’s opinion and there are risks of transgression if this were overlooked.

It is noteworthy that this particular viewpoint has not been published in a column, on the website or in a Bulletin. Still, be careful!

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

Comments 3

  1. Not so simple…
    The backup offer is an offer conditional on the first offer falling through. This puts the first offer in a position to either waive and win or amend and take their chances. It puts pressure on the first offer and is in the best interests of the Seller, unless the second offer is higher and firm.
    As a representative of the Seller, we must do what we are instructed to do as long as it is not unlawful. This does not break any laws in spite of what RECO might have you think.
    What is the right thing to do is to inform the 1st buyer that there is another offer on the table. According to the current rules of the game, we may not disclose the details of the 1st offer… at this time.
    When that changes, soon according to RECO, the game opens up to new discussion.
    Brian, you know I respect you , but you will need to be more detailed in order to maintain my interests.

    1. Post
      Author

      While they are not technically competing, that’s it, in terms of the legal requirements.

      That said, we look to another issue and thgat is “negotiating” which you raise.

      Absolutely, you want to encourage as much interest in the property as possible and if you can encourage participants to bid against one another then “all the better”.

      Actually, the strongest degree of interest appears to be small issues, one at a time, not too complex. The more detailed and complicated these blogs get, the lower the interest and participation. All the best.

  2. Brian is correct in his comments . In Ontario, RECO often makes comment that are not understood and indeed at times made without fully understanding the true nature of the events.
    I agree that if the conditional offer does not firm but asks for an amendment to extend, they SHOULD loose out. That said, there is a duty of fairness expected of the agent to the other party. Sellers and buyers do not have this duty, we do, and RECO staff, in their judgement, may read the situation totally different than we do in our bias for our client.
    So, I have had the same thought, a buyer wants to change an offer and not immediately waive a condition, within the time limit of that condition, the buyer is out. Not so fast said various lawyers.
    The simplicity of RECO’s logic, two offers on the same property, they are competing. But… one has precise me as to was first.

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