Under TRESA, we have the same mandatory disclosures in respect to competing offers.
- The number of competing offers,
- If the Listing Brokerage acts for one of the prospective Buyers, and
- If a commission arrangement might affect the decision to accept an Offer.
NUMBER
No significant changes here. The number is still the number. If an Offer expires, it is to be deducted from the count. With TRESA, that might mean sharing all irrevocable times. That would work. Alternatively, once it expires, it is simply eliminated from the overall total. That would work as well.
Brokerage Multiple Clients
This used to be a Buyer who was either a Client or a Customer. Now that customers under TRESA are gone, it’s just Clients.
However, be careful Customers can run until 30 March 2024. So, count them just like Clients in the meantime.
Commission Arrangements
Here’s the relevant regulation:
“23.(4) If a brokerage has entered into a representation agreement with a seller and an agreement between the brokerage and the seller contains terms that relate to remuneration and those terms may affect whether an offer to buy is accepted, the brokerage shall disclose the existence of and the details of those terms to any person who makes a written offer to buy as soon as possible after the offer is made and before any offer is accepted.”
The key words here are “may affect”. It doesn’t say “reduce” which is the common understanding. That’s actually the most likely situation. There are actually a couple of additional examples.
Self-represented party
The self-represented party cannot receive the cooperating commission offered. The total commission remains the same ie. 5% and while it was 2.5% -2.5%, it’s now 5% for the Listing Brokerage. Essentially, that means that the Listing Brokerage may very well be cheering for the self-represented party, since they make double the commission.
Referral Fee
The actual Listing agent felt that they should not have a multiple representation situation. So, they referred out (subject to a referral fee) all the potential Buyers who attended the Open House. One of them, now wants to place an Offer. In this situation, The Listing Brokerage will be receiving a 25% referral fee. Again, the Listing Brokerage will be cheering for this Buyer over others, since they will make a higher commission.
This is the summary:
- Reduction of commission overall, if Brokerage represents Buyer
- A Cooperating Brokerage waiving commission
- A Cooperating Brokerage reducing its commission entitlement
- A self-represented party who cannot receive commission
- Entitlement to a referral fee from a Buyer’s Brokerage
Brian Madigan LL.B., Broker
Comments 4
Hi Brian – I really enjoy this blog. As far as referral fees go would this have to be disclosed? The sellers is still paying the same commission amount.
Author
Yes, but the Listing agent is receiving a referral fee and will be cheering for one of the Buyers.
Hi Brian,
Thanks for your amazing resource here! I’m wondering at what point you can stop updating the offer count. Hypothetically, let’s say the time given by the listing agent to submit offers is 6:00pm. There are 5 offers submitted by that time and they let all parties know they are in competition and there are a total of 5 offers. One offer’s irrevocability is 7:00pm. You aren’t able to meet your sellers until 8:00pm. The listing agent asks if that buyer agent can resubmit with a longer irrevocable, they say they will, but for some reason, they do not end up coming back to the table. The LA meets with their clients at 8pm but they take a long time to discuss and another offer expires at 9:00pm. Then, they maybe decide to counter offer one that is still alive at 9:30pm and in the midst of that going back and forth, another offer expires at 10:00pm. What if you are in sign back but the other 4 offers are now dead? Do you need to indicate to the one remaining buyer agent that their clients are no longer in competition (actively in signback, but not yet accepted).
In my experience submitting for my buyer clients in multiple offers, I will hear the “final” count at 6:00pm, but never any updates on dead offers/new offer count after that. The next communication is usually that the seller has accepted an offer.
At what point in the process does your obligation to provide an offer count to the other buyer agents end?
Last scenario, if there are just 2 offers at the submission deadline of 6pm. Offer 1 dies at 8pm. Offer 2 is the preferred offer and is irrevocable until 11pm but sellers are slow at accepting. We need to tell the agent for Offer 2 they are no longer in competion at 8pm, correct? And when we do, what are their options? Can they take back their offer (or revise it) even though it is Irrevocable for 3 more hours?
Your help is appreciated. Thank you!
Jenn Spencer, Broker of Record
Author
Yes, good question. They all expire at various points in time.
The practice appears to be just once, but really to keep everyone fully informed, it would be information which should be regularly updated.
This would be easy enough to do, but no one bothers to do it.
How many Offers do you haveÉ The response depends upon timing. There were 10, but now there are only 4. That would be the correct answer!