OREA wants bully offers banned

OREA wants bully offers banned

OREA wants bully offers banned

The Ontario Real Estate Association is lobbying the provincial government to prohibit bully offers, citing its desire to enhance professional standards in the industry.

“We’re asking not to allow bully offers or pre-emptive offers to create more fairness in the home buying process, and it’s just one of the 28 recommendations we have outlined for a modern vision of REBBA,” said OREA’s President Karen Cox.

Cox added that the Real Estate and Business Brokers Act was created in 2002 and the time is nigh to adapt it to the modern world.

“By modernizing the rules, we’ll make sure all real estate agents at (consumers’) side have the highest professional standards during the biggest financial transaction of their lives.”

Typically, eager buyers submit bully offers before the advertised offer date or before the listed sell date.

“But it doesn’t mean it’s the best offer the seller will receive,” said Cox. “They don’t know that because they haven’t received offers from interested parties and that really frustrates buyers because they haven’t had a chance to participate and that’s why we’ve recommended ending bully offers.”

Daniel Johanis, a mortgage broker with Rock Capital Investments, says that he has seen realtors raise commission rates before making bully offers—a practice he says is, at best, questionable.

“I’ve seen this happening before, especially through my relationships with some solicitors in the city who have seen their commission get bumped up to 3%, 4% on a successful bully offer,” he said. “It happens here and there.”

Moreover, Johanis says that buyers often relinquish some, or all, conditions, like home inspections, financing clauses, reviews of the status certificates and more.

“On some of the deals I’ve worked on, bully offers have come in and I don’t think they should be completely banned, but some regulations should be put in place,” he said. “When you have a window of six hours to turn something around, that isn’t enough time for both sides to properly review an offer.”

Ron Butler of Butler Mortgage supports OREA’s bid to have bully offers proscribed during the home buying process because it’s akin to conducting business in bad faith. He additionally noted that mortgage brokers are subject to stringent restrictions and there’s no reason realtors shouldn’t be either.

“Under our new regulators, we’ll be required to show three different quotes on a mortgage,” Butler said of the Financial Services Regulatory Authority of Ontario. “We’ll be under that kind of restriction to prove we actually went out and got multiple rates instead of just saying, ‘I looked all over and this one is the best.’ True protection of the consumer requires a very big degree of transparency.”

  • X-Realtor 2019-04-10 9:07:43 AM
    There was a time when many real estate boards restricted the posting of listings on MLS if the subject property was not readily viewable and/or there were restrictions to presenting offers, etc. Rule changes brought about the current problem with bully offers by allowing holding off on shows and/or offers until a specified date. IMHO, if a property is exposed to the market place through a controlled/regulated service such as the MLS, rules should be the same for all properties and all members. This prevents confusion, misinterpretation and possible litigation through a standardized system built for everyone, not just creators from large boards like Toronto and Vancouver. As for bully offers, if I am a buyers representative, representing the best interests of my client, the buyer I'm going to do what is ever necessary, with in legal boundaries to get my client the property they desire. I don't care. what some listing agent puts in their listing. This does not reflect on what may be in my Buyers Agency Agreement with my client, so if need be, I would be submitting a bully offer. Another thought to consider is what if I'm a real estate a broker who's not a member of a Real Estate Association? I'm not bound by the regulations of the association or the local real estate boards. Hence, this puts members of a real estate association/board at a disadvantage if governed by the regulations of their board. Maybe the Association and regulators need to think that through. Should this scenario require a disclosure to a client that they may be at a disadvantage because their agent is a member of such and such real estate board? And what about disclosure to your Seller client that you may not actually be a member of the real estate board for which their MLS listing will placed if they use your company. I see potential disadvantages to your client here as well. Should you disclose?

    The problem with the real estate associations is their still stuck in the old Agent/Sub-Agent mindset where ALL Realtors represented the Seller and only the Seller. Wake up my friends, Buyers have Rights too. If anything, the regulators should be setting guidelines for different selling models instead, for example. If you want to hold offers, consider a tendering process with sealed bid offers ONLY. Accepting bully offers prior to the tender date would be a breach and a chargeable offence. How about better guidelines on the auctioning process? Just examples for making the industry better - not restrictive and protective.

    Real Estate Associations need to improve and standardize the MLS to the benefit of ALL Realtors. This means transparency of all real estate data from ALL real estate boards on MLS, a true universal MLS system integrated with municipal services, MPAC, Chambers, etc. If you're a sleep at the wheel, disrupters like Zillow will do this for you.

    Just my rant.
    Post a reply
  • Wise 2019-04-10 3:28:36 PM
    When it’s not a good idea to deal with a bully offer:

    The offer is not ridiculously high

    You have a ton of traffic and the feedback that is very good, and you expect a large number of offers on offer day.

    Your agent doesn’t have enough time to notify all other interested buyers that an offer has been submitted.
    Post a reply