Contemplating increased disclosure and transparency regarding presentation of offers

By Rock Lefebvre, Executive Director & COO

In this seller’s real estate market, housing prices have reached unprecedented levels while stories abound of would-be buyers who have been thwarted, numerous times, in their hopes to be the winning bidder of a property. In such a competitive market, sellers are naturally inclined to legally instruct their representative to delay or hold all offers until a specified date and time with the reasonable view that offers can be reviewed and considered once all offers are on the table.

Sellers may have different motivations for delaying offers — but REALTORS® realize that doing so allows for greater exposure leading also to competitive upward price pressure to the benefit of the seller. Sounds reasonable enough — at least until some buyers elect to leapfrog the line by submitting a pre-emptive or “bully” offer that may expire before other offers are expected to be presented.

As most can attest, these bully offers, together with the numerous competing offers, can present challenges for buyers who may respond by offering more for the property or removing conditions that were responsibly included to protect them.

Joint Rules of Cooperation Task Force

For these reasons and others, the FVREB, CADREB, and REBGV have been working through the joint Rules of Cooperation Task Force with a view to introducing changes that reduce both deliberate and unintended gaming of the system, while fostering increased public confidence in the real estate profession. To be clear, the joint Rules of Cooperation Task Force is comprised of senior members, broker representation, and staff from each of the Boards.

More specifically, anticipated amendments to the Rules of Cooperation would see that a seller’s instruction to delay or hold offers until a specified date and time becomes irrevocable — effectively preventing bully offers — and conforms to the established presentation date. Resulting from changes to the wording of the Rules of Cooperation, such change would require amendments to the Direction Regarding Presentation of Offers (DRPO) form, correspondingly made mandatory.

Also, under consideration by the joint Rules of Cooperation Task Force is the introduction of a new disclosure form, itemizing the number of offers presented on a property, accompanied by the names of the buyers’ agents. Such a seller-signed form would need to be completed by the seller’s agent after a multiple offer presentation and remitted to the buyers’ agents within a reasonable period of time (such as 24 hours) of an offer or counteroffer being accepted and signed.

Taken together, these measures aim to improve transparency in the process, assuredly revealing that the seller has been deliberately presented a would-be buyer’s offer.

At this time, the tentative revised language of the Rules of Cooperation and the corresponding forms are being vetted by legal counsel, working collaboratively with the joint Rules of Cooperation Task Force, and the three representative Boards in the spirit of achieving remedies that are satisfactory to the parties and reflective of the increasing expectations of consumers.

As and when finalized by the joint Rules of Cooperation Task Force, any suggested revisions to the Rules of Cooperation will be directed to the respective Boards of Directors of the three Boards for consideration and prospective ratification, with some changes coming into effect as early as June of 2022, if approved.