Competing Offers

In certain market conditions, consumers may find that more than one buyer is interested in a property. This is a competing offer situation and creates unique conditions in a real estate transaction. Both sellers and buyers need to consider how to respond when presented with a competing offer situation. Working closely with your real estate broker or salesperson will ensure that you understand the process.

In Ontario, the seller's real estate broker or salesperson is required to disclose the number of competing offers to all buyers who have submitted a written offer. However, the terms and conditions of each offer are confidential to the seller and their broker or salesperson.
Working with a real estate broker or salesperson

The seller's real estate broker or salesperson represents the interests of the seller in the transaction. The decisions about how offers are presented and responded to, as well as which offer is accepted, are made by the seller.

The buyer's real estate broker or salesperson represents the interests of the buyer in the transaction. The buyer makes the final decisions related to their offer, including the important decision of whether or not they want to participate in a competing offer situation.

In some situations, the real estate broker or salesperson will represent the interests of both seller and buyer or multiple buyers. Consumers should seek guidance from their real estate broker or salesperson if this situation arises.

Tips for Buyers

In a competing offer situation, buyers may be tempted to offer more for the property than they planned to and/or remove conditions from offers that are intended to protect them.

Before participating in a competing offer situation, buyers should consider factors such as:

Offer Price
How much can the buyer afford to offer for the property and how much is the property worth? A high offer could enhance the buyer's chance of success. However, it may not be the best long-term financial decision for the buyer. A competing offer situation does not necessarily mean that a property will sell for more than the asking price. Similarly, an offer that meets or exceeds the asking price will not guarantee that a buyer's offer is accepted.

Financing
Buyers should be aware that pre-qualifying for a mortgage does not safely eliminate the need for a financing condition in an offer.

Home Inspection
In competing offer situations, it can be tempting not to include a clause in an offer that makes it conditional on a home inspection. While your offer might be more acceptable to the seller, you may later learn that there are property defects, required repairs or needed upgrades that you weren't aware of. In some cases, this can be expensive in the short or long-term. Foregoing a home inspection is a significant risk that a buyer needs to carefully consider.

Tips for Sellers

A seller facing competing offers has to consider how they want to deal with the situation. The seller can decide to: accept the best offer; negotiate with one buyer and reject all other offers; negotiate with one buyer and advise other buyers that their offers are being set aside while the seller negotiates; or reject all offers.

Even in a competing offer situation, buyers have other options and may choose not to continue to participate. A seller may attempt to negotiate only to find out that it was the best offer the buyer could present. In the meantime, other buyers have found new properties they are interested in.

The seller's real estate broker or salesperson can provide advice and guidance, ensuring that the obligations and the options available are understood.

Real Estate Council of Ontario

Resale Home Prices Are Increasing Even As Sales Voumes Are Lower From Last Year

Toronto Real Estate Board

March 19, 2008 -- Resale home transactions in the Greater Toronto Area continued at a moderate pace during the first half of March, Toronto Real Estate Board President Maureen O’Neill announced today.

With 3,183 transactions to mid-month, sales in the GTA and in Toronto declined 14 per cent and 18 per cent respectively compared to the same timeframe a year ago.

“It’s important to recognize that we have endured the snowiest winter since 1939 and this has undoubtedly affected the market,” said Ms. O’Neill. “The storm that pounded the GTA during the second weekend of March likely had more people focused on shoveling sidewalks than house hunting.”

Despite moderate activity, the value of homes in our city continues to appreciate. At an average of $385,405 in the GTA and $409,116 in Toronto, prices have increased five and four per cent respectively compared to a year ago.

As well, some neighbourhoods experienced an increase in activity during the first half of March.

At the North end of the Greater Toronto Area, Georgina (N17) experienced a 39 per cent increase in sales during the first half of March, driven mainly by detached home transactions.The Agincourt area of Scarborough (E07) experienced a 12 per cent overall increase in sales compared to a year ago based primarily on strong condominium apartment sales.

Strong condominium apartment sales also allowed the Weston area in York (W04) to hold strong, with a 28 per cent overall increase compared to a year ago.

Toronto's Downtown core (C01) has also experienced healthy sales activity so far this month, due to strong condominium apartment sales as well. Overall sales in this area were up 11 per cent compared to a year ago.

“Condominium apartments have weathered the winter best so far this year, with 733 sales to date but we remain confident that once the snow has melted, we will see a very active spring market overall,” said Ms. O’Neill. “The land transfer tax in Toronto concerns us and we continue to keep a watchful eye on how this tax plays out in the market.”