The Toronto real estate legislations stipulate that brokerages and salespersons follow some legal rules when a seller receives multiple offers. One of the rules clearly states that other bidders may not be able to see the content of other bids.
This is because the real estate legislation of the government is based on closed offer process. This means that the offers handled by realtors remain confidential. It is only the final sales price that becomes public. Apart from, this there are other rules that need to be followed on multiple offers. They include disclosure and record keeping so that there is complete transparency in the offer process.
Brokerages need to keep copies of all offers that they had received for each individual property for at least a year. Unsuccessful bidders wanting to verify the number of other offers received may ask the listing brokerage to disclose the details. They can also ask the Real Estate Council of Ontario to seek information from the brokers on their behalf.
Proper disclosure of information is the other rule that comes into effect in a bidding process with multiple bidders. If the brokerage is servicing both buyers and sellers, they need to disclose this in writing to all parties concerned with the deal. This is commonly referred to as multiple representations and it is legal if the brokerage disclosed this aspect and gets consent from both parties.
The other rule pertaining to disclosure involves changes that are made to the commission offered by the seller. When brokerage representing the seller agrees to reduce the commission that is mentioned in the contract then that information also needs to be disclosed to all parties the transaction. This ensures that one buyer does not have an unfair advantage over other buyers.
The real estate legislations are intended to promote transparency in all real estate transactions. The safeguards ensure that the bidding process is fair and transparent. The new rules have been introduced to make bids more transparent and prevent “phantom bids” that were practised by some brokerages.
The realtor will not be allowed to tell potential buyers and others about the many offers that have been received until the bids are signed, sealed and delivered. This helps do away with offers that are often talked about but never materialize. Such offers have the tendency to drive up the price of the property due to speculation.
The listing agent may not able to specify that he has an offer unless the offer is made in writing. The offer has to be signed by the buyer and this helps protect the consumer. The potential buyers may not be told how close each bid was to the winning bid.
The details of the sale and purchase are between the parties to the transaction and no else needs to know about it. If there are any complaints that are to be made to the Real Estate Council of Ontario and the listing agent regarding the bidding process, the proof is required.
The real estate legislations also cover land transfer tax. These taxes are imposed on the transfer of property in some provinces and by the municipality in Toronto. The tax that needs to be paid is based on the value of the property. Some leaseholds and other interests in land may be exempt from the land transfer tax.
Real estate brokers, mortgage brokers, administrators, and lenders are all subject to regulation in Toronto. These regulations are governed by various pieces of legislations from the provincial legislation. Agents, administrators, brokers and mortgage brokerages all need to obtain a licence to do business.
The Real Estate Council of Ontario is responsible for regulating trade in the real estate sector. All brokers, sales persons, brokerages or any person involved in the trade of real estate need to be registered with the real estate council. They need to accept a Code of Ethics and follow all legislations that define how all real estate transactions need to be done.