Many prospective buyers have waived home inspections and financing conditional clauses in a desperate bid to win the house of their dreams, only to end up with a nightmare of costly repairs and upgrades later.
With the spike in multiple offers during the past year across the GTA, the concerns and confusion around multiple offers, and the high number of complaint, are part of the reason the Real Estate Council of Ontario (RECO) is launching a new consumers education campaign this week.
The public awareness campaign on public transit and YouTube are meant to encourage prospective home buyers to do their homework and make an informed decision before undertaking the biggest purchase of their lives. and look beyond whether the home is in the best neighbourhood or school district.
Some prospective home buyers, even against the advice of their REALTORS®, have waived home inspections and financing condition when they found out there were multiple offers on the property. In bidding wars,logic,reason and rational thought are often replaced by emotion and haste.
The council has seen prospective home buyers walk away from large deposits, or end up in costly court litigation, because they waived home inspection and financing conditions to get a leg up in multiple bids. Some were unable to close the deal because they were not approved for financing or the bank felt they over paid for the property.
Others found out too late that the property had mould, tube wiring or structural damage that would have been discovered in a home inspection.
the emphasis on information and knowledge in advance of attending to open houses and submitting offers, home inspection and financing is to prevent these kind of situations.
Some prospective home buyers calls have come from home buyers angry that they lost out to a lower bid, yes lower bids or calls from buyers who believe when informed of all potential bidders that multiple offers have been registered against a property, that those numbers are being exaggerated to drive up emotions and house prices.
Sometimes a seller will choose a lower bid offer due to the buyers ability to close the deal at a specific time, or for many other condition that are more suitable to the Seller.
REALTORS® are required under strict code of ethics to inform all potential bidders that multiple offers have been registered against a property.
RECO has the power to investigate so-called “phantom bids” which are unethical and prohibited under the code of ethics under the Real Estate and Business Brokers Act which regulates REALTORS®.
With the Greater Toronto Area Seller market and the current supply and demand situation, where demand is greater than supply, a lot of power is with the seller.
Last week ReMax reported that some 50 per cent of homes in the “coveted” $600,000 to $900,000 range in prime Toronto neighbourhoods have been selling over asking.
But bidding wars are also emerging in other cities and a number of other resource-rich areas of Canada, it noted.
RECO also stresses safety when holding open house and recommends that sellers put personal valuables such as: photos, jewelry and medicines out of sight during open houses. and keep away any thing that would give information to would-be thieves to the fact you may live alone or travel a lot.
Buying a house is the largest financial transaction most of us are ever likely to make, that is why it is important to be informed and knowledgeable before undertaking such journey.
RECO has a website and a host of information brochures meant to educate buyers, and sellers, about the ins and outs of bidding wars, the legal obligations when you sign a contract with a realtor, issues around mortgage fraud.
It also has a complaints line and email address: 1-800-245-6910or firstname.lastname@example.org
What Buyers and Sellers Do in Multiple Competing offers