Lethbridge and the Southern Alberta real estate market have been anything but slow these days. As we approach the spring market and ever-decreasing interest rates, we are finding that more and more homes are receiving multiple offers. This means that both for buyers and sellers it is imperative you understand your options in these (seemingly tricky) scenarios.
Background: in Alberta, we are governed by the Real Estate Council of Alberta. The Real Estate Council of Alberta sets, regulates, and enforces standards for real estate professionals across the province. As licensees, we are bound by these rules and regulations and our code of conduct is enforceable as such. This information comes from RECA directly.
Multiple Offers: The Seller is in the Driver’s Seat
The most important take away when it comes to multiple offers is that the Seller determines the process. To ensure clarity, we’ll say it again: The Seller determines the process; they are in the drivers seat.
Myth: There is a duty of fairness between buyers, sellers and licensees.
Fact: No. While sellers and buyers have a duty of honesty, there is no duty of fairness to each other. Whether representing the sellers or the buyers, licensees are required to act in the best interests of their clients.
It is the seller’s choice whether they disclose the multiple offer situation to other potential buyers. They may also choose whether to disclose the amount of the other offer(s) and the terms of those offer(s). The seller can also choose to disclose this information to one prospective buyer and not another. The seller can choose any offer that came in, for whatever reason. The seller is in the drivers seat and there is no duty of fairness.
What Can Buyers Do?
The best advice for a licensee with buyer clients in a multiple offer situation is to advise the buyer of the advantages and the disadvantages of their options, so the clients can decide on the path that is best for them. Buyers, this means lean on the expertise of your Realtor.
These options include:
- Leaving their offer as it is and hope the seller chooses it
- Withdraw the offer
- Increasing the amount of the offer before it is presented
- Reconsidering the fixtures, chattels, terms and conditions of their offer to be more appealing to the seller
- Including a term or condition that will compel the seller to deal with their offer at the time of presentation or face withdrawal
- Requiring the seller to agree that they will not disclose the price and terms of the offer to any other buyer prior to the buyer making an offer
Acting Honestly
Both the sellers and buyers have a duty of honesty. However, honesty does not mean that the parties are required to be transparent.
RECA receives many complaints about multiple offers, specifically from buyers who feel a seller and their licensee weren’t honest with them about a multiple offer situation. Often, this is saddled with the expectation that the seller is required to be transparent with the buyers. It is essential that the difference is understood between the multiple offer process and legal obligations between buyers and sellers. What does that mean? A Licensee must conduct themselves in a way that maintains trust and confidence with their clients.
Even though the seller chooses how the decision is made, licensees must ensure that they are acting honestly and lawfully. Licensees cannot participate in dishonest behaviour and are prohibited from following unlawful instructions. For example, when representing a seller a licensee cannot follow an instruction to communicate that the seller has received other offers if other offers have not been received. If a licensee does not act honestly and lawfully, it is conduct deserving of sanction.
Multiple Offers Best Practice
The best approach when dealing with multiple offers is education. Understand the advantages and disadvantages of the various options available, as well as potential responses of the other party. It is imperative to recognize any potential conflicts or circumstances that would inhibit the licensee to act in the best interests of a client. Should conflicts exist, a licensee must provide their clients with options to resolve the conflict and allow the client to choose the option they feel is in their best interests.
The Seller is in the drivers seat. As a buyer, ensure you talk to your Realtor about what this means for you in your home buying journey. In Lethbridge, we are leaning into a sellers market and having the right information in hand prepares you to take on this real estate market with confidence and preparedness to get you the home you want!