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Multiple Offers, What are the Rules?

Posted by Keith Pushor on 6 January 2022

“We have competing offers!“. These can be a seller’s favourite words to hear from their agent, and probably a buyer’s most hated words to hear (next to your offer was rejected)! In the current pandemic market we find that we are dealing with multiple offer situations on listings quite often. And while you can argue that it is a seller’s dream to have more than 1 offer on the table, the situation can also potentially create anxiety, stress, heartbreak as well as euphoria for the parties involved.

Typically when we talk about a market where buyer demand exceeds listing inventory supply we are talking about a seller’s market. But there can be multiple offer scenarios in a balanced, soft, or buyer’s market as well. For example, a property might come up for sale that is in an extremely sought after location; or a listing could be priced so aggressively (aggressively low) that it stands out as an obvious “steal”…even in a buyer’s market; additionally a particular property may offer rare or unique features that are attractive to several, specific buyers who happen to be searching for those features at the same time. In any case a multiple offer situation can arise in any market!

So what are the rules when competing offers are in play? There are assumptions and opinions out there, and while some of these do have some merit the fact of the matter is that there really is not a set, mandatory protocol in Alberta when it comes to dealing in a multiple offer environment. In fact, as Kristian Tzenov (Real Estate Regulatory Compliance Advisor for RECA) wrote in an August 2021 article: “The most important take-away when it comes to multiple offers, is that the seller determines the process. This is so important that I’ll say it again: the seller determines the process. They are in the driver’s seat.”

The only duty a seller has is to act honestly and lawfully. This does not mean, however, that a seller has to be transparent in what they disclose to a buyer in terms of the existence of multiple offers. Sellers can choose to inform one, some, all, or none of the buyers involved that there are multiple offers in play. Furthermore, a seller can choose to disclose the terms of one or several of the offers to none, one, or several of the competing buyers!

Rules are one thing, but what is the best practice that sellers and their agents follow? In this writer’s opinion the main goal of a seller’s agent is to get the highest and cleanest offer accepted that provides the best chance of advancing the seller’s position, and successfully closing. Generally speaking if a legitimate buyer has the knowledge that they are competing with other offers on a property, that buyer will put forth their strongest offer that will have the best chance of being accepted by the seller. A strong offer does not only refer to an attractive price, but also favourable terms and conditions (or lack thereof).

That being said, everyone likes to feel that they have been treated fairly (buyers, sellers, and agents) when involved in a real estate transaction. But what is fair could have different meanings to different people. At the end of the day an agent’s primary responsibility is to his or her client, but in a perfect world an agent will get the best results for his or her client, and know that they did it fair and square.

Multiple offers can very much be an adventure in real estate!

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