Question:
You are the listing agent of a property. You get an offer under asking price, with conditions.
You counter it back to the Buyer a little under asking price.
While the offer is in the hands of the first Buyer and still within the irrevocable time, you receive another offer $50,000 over asking price with no conditions.
Your Seller tells you not to let the first Buyer know you have another offer. They hope the Buyer will counter back, and then you can accept the second offer.
Do RECO rules require you to inform the first Buyer?
Answer:
You naturally act in the best interests of your client. These are not competing Offers under the Code. There is only one single Offer, and that is from the Seller to the first Buyer. It is already “in play”. There is only one Offer, until the first Buyer counters, then, we have two competing Offers, one from the first Buyer and another from the second Buyer. At this point, they need to know about one another and that is when the duty arises under the Code (s.28). So, in my view, there is nothing to say, so just keep quiet and you should be fine.
Also, it would have been helpful to have a short irrevocable on the signback, or alternatively, take the seals off, contact the first Buyer and revoke the Counter-Offer.
Here is the section under the Code of Ethics:
Competing offers
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. O. Reg. 580/05, s. 26 (1).
(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. O. Reg. 580/05, s. 26 (2).
So, in this case, if indeed the Offers were in fact “competing”, this Seller would be better off to be a “customer” and eliminate the right of the Brokerage to receive offers. Obviously, that can’t be right. That would just be absurd!
Brian Madigan LL.B., Broker
Comments 4
What do you mean by “…. alternatively, take the seals off,”
Author
Back in the day, this was much easier, you simply didn’t place the little red wafter on the blck dot.
Today, the black dot IS the seal.
So, to remove it:
1) white it out, if you can,
2) place and “x” through it,
3) write the words “no seal” under it, and
4) add the words “this document is not executed under seal” in Schedule “A”.
This is similar to the situation o had about a month ago when I had an accepted APS with conditions and the buyer came back to us with an amendment. There was one day in the conditional offer to waive all conditions. Unknown to the buyer agent, we received a second firm offer for $200k more on the property.
My dilemma was, do I do lose the offer, or no. I did and they waived.
Author
Interesting situation!