Open Offers vs Closed Offers
With the new Trust in Real Estate Services Act introduced this past month, new to Ontario is the choice of Open Offers.
A closed offer process is when the buyers in a multiple offer situation have no idea what the other offers might consist of, and the buyer has no idea what they are up against.
The open offer process allows the seller the choice to disclose the substance of offers.
Buyers in the past have been very discouraged and have been wanting a process with more transparency. Here are some details.
The option of closed or open is solely in the hands of the seller – NOT the buyer. Further, the seller can switch from closed to open at any time during the process. For example, the seller may receive three offers and he stated it would be a closed offer process. Once he reviews the offers, he decides he would like to disclose specific information about the offers. He relays his instructions to his Realtor, and the Realtor will then relay the change to the three buyers.
Continuing with this example situation, the seller can determine what terms he would like to disclose to the three buyers. He could choose to disclose the closing date of each offer to all parties. Or he can choose to disclose the price and terms.
We don’t think buyers will be too happy with this new process – it feels like sellers can show what they want, and when they want, and doesn’t provide the transparency the buyers have been wanting.
Right now we are in a quieter market and only a small percentage of properties are getting multiple offers, but over the next few months it will likely pick up pace and this will be more important for both buyers and sellers to be aware of.