In my recent update on the Milton Ontario real estate market, I made a comment that eluded to the thought that perhaps a house is sold too quickly when it is sold with multiple offers within 24 hours of it coming onto the market. I’m now going to elaborate on that thought for you.
As a Realtor, when working with a client, I have what is known as a fiduciary responsibility to my clients. The definition of fiduciary, as found on Wiki is:
“A fiduciary duty is the highest standard of care at either equity or law. A fiduciary (abbreviation fid) is expected to be extremely loyal to the person to whom he owes the duty (the “principal”): he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents. The word itself comes originally from the Latin fides, meaning faith, and fiducia, trust.”
One of the reasons that homeowners hire Realtors to sell their home is so that they can get fair market value for their home. According to the Ontario Real Estate Association, fair market value is determined when a willing, informed buyer and a willing, informed seller come to agreement after the property has been reasonably exposed to the marketplace. Yes, this is not an exact quote, however, this is the essence of the definition as drummed into every Realtor who is licensed in Ontario. Another thing that I am convinced that most Realtors never consider is that there is usually more than one buyer for a home, and it is the Realtor’s job to attract and negotiate an offer with the best buyer for that home.
I gotta ask you, how can 6 or 12 or 24 hours possibly be considered to be ‘reasonable exposure’ to the marketplace? I challenge any one of my colleagues to convince me, or a judge for that matter, that this is even remotely close to reasonable exposure! After all, people work, they go away on weekends, etc.
Don’t get me wrong, I know there are times when a seller wants the process finished immediately, however, they are few and far between. I have to believe that if the vast majority of sellers were advised that it would be good for their home to have 3, 4, or 5 days exposure to the market, they could still get multiple offers AND get more money. Realistically, how many people are going to turn away $5,000, $10,000 or more in exchange for keeping their home ‘showings-ready’ for an extra couple of days? Would you?
I’ve been saying for most of my career as a Realtor that one day, somewhere, sometime, some smart lawyer will launch a class action suit against the real estate industry over this matter, and I have to say that I would be fully supportive of such a suit.
I’m not naive, I know that waiting a couple of days for offers could cause some people to walk away; it could, but it’s not likely when there is a drastic shortage of inventory. Heck, this is the perfect time for sellers to wait and get more money; there just aren’t another 3 houses for them to choose from!
There have been a few articles in the Toronto Star recently, talking about multiple offers – here’s a snippet from those pieces:
- For sellers, bidding wars or multiple offers from buyers are a dream come true. Numerous bidding wars took place in the United States and in many parts of Canada before the economic meltdown of 2008, but for the most part, such widespread buying frenzies are no longer taking place. Yet even in today’s balanced market, bidding wars continue on specific properties in certain areas. Although we are seeing many examples of multiple offers, it does not necessarily mean buyers
are overpaying for properties.
Read the entire article here
- Sellers or real estate agents lying through their teeth; opening up offers after the allowed time period. Those are just a couple of the allegations I have received via email following my recent articles on bidding wars.
We are now seeing an increase in people entering the market at the same time as the number of homes for sale are going down. As a result, buyers need to be even more aware of some of the practical problems they will face when they choose to participate in a multiple-offer situation.
Here are some situations that I’ve been told about:
Read the entire article here
Please, don’t think I am against the real estate industry; I’m not, and wouldn’t be such an active participant in it if I did not believe in the great value that Realtors bring to the public. However, there certainly is room for cleaning up some areas of the industry, and I believe this is one of them.
