Thursday, June 11, 2015

Phantom real estate bids are enough of a problem that Ontario is cracking down this July

Starting July 1, the Real Estate Council of Ontario (RECO) will be enforcing new rules that place strict criteria on what constitutes a bid on a residential property. The goal is to crack down on the elusive phantom bid, which some homebuyers suspect occur in bidding wars, but are unable to prove. This involves sales agents hinting to prospective buyers there are other bids as a way to coax them to bid higher. "They say, 'We're expecting another offer. I do have another offer. You may want to go back to your client and make sure this is their best offer'," says Joseph Richer, registrar of RECO. "They are suggesting there might be competing offers when there may or may not be."

With the new rules, "You cannot suggest or even imply that you have an offer unless you have one in writing, signed sealed and ready to be delivered," said Richer, while adding there have been very few formal complaints about phantom bidding over the years.

The current rule is clear that no offer is valid until it is signed. The new rules will force brokerages to keep an offer, or an equivalent summary (basically, a list of buyers and contact info with name of broker, date and time), on record for one year.


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