Back to Caught in a bidding war? Know the rules
Caught in a bidding war? Know the rules
June 24, 2011
Mark Weisleder
Multiple offers or bidding wars continue to happen all over the GTA. Buyers, sellers and real estate agents need to be aware of what to expect. The rules may be different, depending on whether you are selling your home through a real estate agent, or privately.
I have been asked a range of questions on this subject: “Why can there not be a silent auction when a house is sold?” “What does registering an offer mean?” “How did the house sell last night when the seller said offers were not to be delivered for three days?”
To create the atmosphere for multiple offers, it may indicate on the MLS listing that interested offers are to be submitted in three days. The seller hopes this will give many buyers the opportunity to visit the property during the three-day period and that this will result in multiple offers.
However, there is nothing stopping someone from delivering an offer immediately. The seller’s agent is under an ethical obligation to bring every offer to the seller’s attention. The seller then has the right to deal with the offer, if they want to.
Most sellers will instruct their agent to tell this anxious buyer to wait until the proper time period. However, if the seller wants to consider the offer, their agent will then change the information on the MLS listing immediately to notify every other agent that the rules have changed, and that offers can be submitted that evening. The agent will also likely call every other agent who has expressed an interest in the property to tell them personally that offers can now be brought immediately.
When a buyer agent has a signed offer, they will usually call the listing agent office to register their offer verbally. There is a protocol that has been established in Toronto that if you were the first to register your offer, you will be given the first opportunity to present it to the seller in person, if there is more than one offer. This is just a protocol, and does not have to be followed by every real estate firm.
However, an offer is not completed unless it is communicated to the seller or seller’s agent, either by personal delivery, fax or email. Therefore, a buyer can still cancel their offer at any time before it is communicated. That is why an offer might be registered but never delivered. The buyer changed his or her mind.
Why can’t we have a silent auction? When buyers make offers through an agent, the agent has an ethical obligation not to disclose the contents of any offer to any of the other buyers. A seller agent can only tell all other bidders how many offers were received. They cannot tell the price or identity associated with any of the offers. However, a private seller could take one buyer offer and just show it to another bidder. This is one of the main reasons private sellers have trouble creating bidding wars.
I think it was a lawyer who created the “sharp bid clause.” An example would be “I agree to pay $5,000 more than any other offer.” This clause would require the seller to tell the buyer what the other bids were so they could bid $5,000 more. An agent cannot do this based on their code of ethics. However, you could give this to a private seller in a bidding war, where the rules are different. If you are thinking of using this clause, I would caution you to add something like “not to exceed $X or a maximum price,” so you do not end up paying more than you can afford.
By understanding the bidding war rules, buyers and sellers can be better prepared for this extremely stressful negotiation.
Mark Weisleder is a lawyer, author and speaker to the real estate industry. Contact Mark at mark@markweisleder.com
Sunday, June 26, 2011
Friday, June 24, 2011
Toronto Housing Market Continue To Surge
Toronto housing market continues surge
By STEVE LADURANTAYE
From Saturday's Globe and Mail June 4, 2011
Sales in Vancouver show signs of slowdown, as index price tops $800,000
When you're hot, you're hot.
It was the second best May for Toronto real estate sales since the Toronto Real Estate Board began compiling data, according to statistics released Friday.
Sales increased 6 per cent from May 2010, while prices gained 9 per cent to an average $485,520. The number of listings to hit the market decreased by 15 per cent from last year, meaning more competition through the summer as buyers compete for fewer houses. Houses were on the market an average of 23 days in May.
The real estate board breaks out sales by median prices, with detached homes hitting $505,000. Other categories include semi-detached at $395,000, condo townhouses at $305,00 and condo apartments at $303,000.
The Canadian Real Estate Association compiles data on the 15th of each month, but the country's 101 real estate boards often release regional data earlier. Vancouver reported Thursday, saying sales were up 7 per cent compared with last May while prices were up 6 per cent.
Sales are showing signs of slowing in Vancouver, however, slipping 8.1 per cent below the 10-year average in May.
The market has caused concern because of the high prices; the board said its index price for a detached house was $805,000 in May, up 10 per cent from a year ago. The index "represents the price of a typical property within a market, taking into consideration what averages and medians do not - items such a lots size, age, number of rooms, etc."
The board said there have a been a lot of high-price sales in Vancouver this spring, which makes big headline numbers deceptive. "Of all residential properties sold on the MLS in Greater Vancouver in 2011 to date 21 per cent sold for $1-million or higher and 20 per cent sold for $350,000 or lower," the board stated.
"While 77 per cent of the properties that sold for over $1-million were located in West Vancouver, the Westside of Vancouver or Richmond, the properties that sold for $350,000 or lower were located throughout the entire board area."
The Globe and Mail, Inc
By STEVE LADURANTAYE
From Saturday's Globe and Mail June 4, 2011
Sales in Vancouver show signs of slowdown, as index price tops $800,000
When you're hot, you're hot.
It was the second best May for Toronto real estate sales since the Toronto Real Estate Board began compiling data, according to statistics released Friday.
Sales increased 6 per cent from May 2010, while prices gained 9 per cent to an average $485,520. The number of listings to hit the market decreased by 15 per cent from last year, meaning more competition through the summer as buyers compete for fewer houses. Houses were on the market an average of 23 days in May.
The real estate board breaks out sales by median prices, with detached homes hitting $505,000. Other categories include semi-detached at $395,000, condo townhouses at $305,00 and condo apartments at $303,000.
The Canadian Real Estate Association compiles data on the 15th of each month, but the country's 101 real estate boards often release regional data earlier. Vancouver reported Thursday, saying sales were up 7 per cent compared with last May while prices were up 6 per cent.
Sales are showing signs of slowing in Vancouver, however, slipping 8.1 per cent below the 10-year average in May.
The market has caused concern because of the high prices; the board said its index price for a detached house was $805,000 in May, up 10 per cent from a year ago. The index "represents the price of a typical property within a market, taking into consideration what averages and medians do not - items such a lots size, age, number of rooms, etc."
The board said there have a been a lot of high-price sales in Vancouver this spring, which makes big headline numbers deceptive. "Of all residential properties sold on the MLS in Greater Vancouver in 2011 to date 21 per cent sold for $1-million or higher and 20 per cent sold for $350,000 or lower," the board stated.
"While 77 per cent of the properties that sold for over $1-million were located in West Vancouver, the Westside of Vancouver or Richmond, the properties that sold for $350,000 or lower were located throughout the entire board area."
The Globe and Mail, Inc
Thursday, June 23, 2011
Wednesday, June 22, 2011
Canadians Want to Pay Off Mortgages More Quickly!
Canadians aim to pay mortgages sooner
Ottawa— The Canadian Press
Published Wednesday, Jun. 22, 2011 9:35AM EDTLast updated Wednesday, Jun. 22, 2011 9:40AM EDTcomments
Canadian homebuyers are showing “a high level of financial literacy,” according to a new Canada Mortgage and Housing Corp. survey that found both high levels of research and a determination to pay off mortgages quickly.
The survey, released Wednesday, said 75 per cent of respondents felt it “very important” to pay off their mortgages as soon as possible and that 39 per cent had set payments higher than the required minimum.
As well, 20 per cent had made at least one lump sum payment since obtaining their mortgage and 39 per cent planned to reduce their amortization periods at their next renewal, CMHC said.
Meanwhile, the survey found 80 per cent of respondents had researched mortgage terms and conditions, 88 per cent had a good understanding of how big a mortgage they could afford and 81 per cent have some form of savings.
CMHC said areas in which mortgage and financial professionals can offer advice and guidance are long-term mortgage and financial strategies, budgeting and managing debt.
It said research showed that during their mortgage research, just 23 per cent of first-time buyers received advice on budgeting and 18 per cent on managing debt.
In addition, the survey found that one in four recent buyers were not sure of where to go to receive reliable advice in case of financial difficulty.
CMHC conducted the online survey of 3,512 recent mortgage consumers between Feb. 25 and March 25.
© 2011 The Globe and Mail Inc. All Rights Reserved.
Ottawa— The Canadian Press
Published Wednesday, Jun. 22, 2011 9:35AM EDTLast updated Wednesday, Jun. 22, 2011 9:40AM EDTcomments
Canadian homebuyers are showing “a high level of financial literacy,” according to a new Canada Mortgage and Housing Corp. survey that found both high levels of research and a determination to pay off mortgages quickly.
The survey, released Wednesday, said 75 per cent of respondents felt it “very important” to pay off their mortgages as soon as possible and that 39 per cent had set payments higher than the required minimum.
As well, 20 per cent had made at least one lump sum payment since obtaining their mortgage and 39 per cent planned to reduce their amortization periods at their next renewal, CMHC said.
Meanwhile, the survey found 80 per cent of respondents had researched mortgage terms and conditions, 88 per cent had a good understanding of how big a mortgage they could afford and 81 per cent have some form of savings.
CMHC said areas in which mortgage and financial professionals can offer advice and guidance are long-term mortgage and financial strategies, budgeting and managing debt.
It said research showed that during their mortgage research, just 23 per cent of first-time buyers received advice on budgeting and 18 per cent on managing debt.
In addition, the survey found that one in four recent buyers were not sure of where to go to receive reliable advice in case of financial difficulty.
CMHC conducted the online survey of 3,512 recent mortgage consumers between Feb. 25 and March 25.
© 2011 The Globe and Mail Inc. All Rights Reserved.
Tuesday, June 14, 2011
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