Two Buyers, One Brokerage: A Strategic Alliance

A Brokerage may represent two different Buyers interested in the same property.

Rather than a problem, this could present an opportunity.

Imagine this scenario, Bob has been working with Mary, his real estate professional, and Henry has been working with Marco, his real estate professional.

They are both looking in the same price range in the same neighbourhood. With so much competition these days, they are frequently one of many potential buyers all participating in a bidding war.

Mary and Marco both work for ABC Realty Inc. a large Brokerage in the area which employs 700 representatives.

They both are interested in submitting an Offer on Mildred’s property which she has listed through David of XYZ Realty Inc., a Brokerage with about 25 representatives.

David recommends that the property be listed at $899,900.00 in order to attract buyers. It’s worth one million dollars.

For this particular property, we have two buyers, namely Bob and Henry and if they aligned themselves strategically they might be able to successfully negotiate something to the benefit of both of them.

The Strategy

  • First, they share information.
  • They agree upon the two Offers being submitted.
  • One will clearly be higher than the other.
  • The second Offer will be accepted since it is the most attractive.
  • Then, following acceptance, they flip a coin to determine who gets the property.

Alternative Strategies

There are some possibilities here:

  • One Offer might be extremely low
  • Both could be very, very close, and difficult to choose
  • One Offer might contain onerous conditions
  • Another Offer might have modest conditions
  • The Buyers could decide in advance, who gets the property

Disclosure of Multiple Representation

The ability of two Buyers with the same Brokerage to “team up” is one of the reasons why the disclosure of multiple representation is required.

This strategy would be placed on the sidelines if there are a significant number of others competing for the same property

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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