The new Ontario Bill-55 has been created to solve the growing problem of phantom offers in our industry – in particular in Toronto’s hot real estate market.

The thing about phantom offers is they are illegal. They are used strictly to fraudulently drive up the price and conditions of the legitimate buyer’s offer. Most phantom offers involve the seller and are trying to take advantage of the buyer.

It’s a few bad apples (again) ruining it for the entire industry and imposing undue hardship on the sales rep who already has the challenge of the MLS being available to the public, private websites presenting themselves as real estate companies, low commissions, extra paperwork imposed by the federal government to help deal with money laundering and more.



So now, to solve the issue of phantom offers, the buyer salesperson had better not present an offer in person without the new OREA form 801 because the listing salesperson will keep the copy of the offer.

The buyer’s salesperson should keep copies of all offers and all sign-backs are considered separate offers. The seller’s salesperson must keep all offers, all sign-backs (as separate offers) or all 801 forms submitted with every offer. All of the above include unsuccessful offers.

How will that help? The Real Estate Council of Ontario (RECO) will now investigate and demand these documents as proof. RECO better hire staff to do this. This came into effect on July 1 and I heard that on July 2, the first request to investigate came in.

It is interesting to see that at the same time that electronic signatures were approved (to save trees?) all this extra paper is now needed to keep record of a deal/potential deal. The question is, will that eliminate phantom offers?

In my opinion, no.

The salespeople obeying the rules will continue to obey the rules. But now they are burdened with a lot more paperwork. Those who don’t will continue and find ways to go around the form 801 system.

Let me start by agreeing with RECO that keeping good records and notes regarding incoming offers is very good practice and is a must. What is needed then?

First: Better definition and better mechanisms of “registering” an offer. This term has no legal definition. Salespeople use it too loosely. It should be in writing (email is okay) and applied to signed offers only.

Second: The onus to prove the existence of offers should be on the listing salesperson only.

The buyer salesperson is already on the hook when they proclaimed in writing that they have registered (or withdrew an offer).

Third: The listing salesperson only will collect info on all offers, including date and time received, name of buyer (from the offer), name of co-operating broker, presentation time and the result of the presentation.

Forth: The seller signs form 109 for every rejected offer.

By the way, presentation in person eliminates a lot of questions, as the co-operating broker will see how many other sales reps are “sitting in” with them on the presentation.

To give you an example how confusing the new rules are, RECO says in its document dated March 20, titled Bill 55: Changes in handling of offers: “For offers coming from a buyer directly, the brokerage must retain the offers in its entirety.”

I understand “coming from a buyer directly, the brokerage…” as a dual representation situation. That is, the buyer comes to your open house and wants to put an offer, or someone in your brokerage brings an offer. My understanding is that there will be no form 801 option in this case. The full offer must be kept.

When I spoke with an official trainer on this particular issue, I was told that “offer coming from a buyer directly” refers to “posted listings” situations where the buyer deals directly with the seller. This was very surprising to me, that the brokerage will now be involved with offers on these types of listings when initially the broker was asked to only put the listing up on MLS for a fee. Does that mean that those private for-sale companies that do all those posted listings must now ask the seller to give them copies of the listings the seller received? What if they don’t?

What if a dishonest listing salesperson writes himself a low offer with unreasonable conditions, “registers it” and announces that there is an offer registered?

A dishonest salesperson will always find a way to beat the system. The honest salesperson is now paying the price.

15 COMMENTS

  1. This is another good example of our boards and associations dropping the ball. We should have addressed this issue ourselves before the province had a chance to think about it. A simple on line registration attached to an mls listing indicating the sales rep and brokerage for all to see would have sufficed. Redesigning and keeping the confirmation of representation on file with the listing docs for offer for verification. Lets re-elect this same people again next time around.

  2. Would this be a “RECO-do-able”??? to set up a RECO web page that automatically, in permanent motion, makes available a notification of a registered signed offer in place, documented and “registered” by the buyer agent, time being of the essence, so that any agent with an offer in the workings could open the page, type in the street address, city, and/or the MLS number – and know that at the exact point in time there is or is not a registered signed offer in place, or more than one.

    If he and his buyer are pleased, the signed offer could then be officially registered and arrangements made to present the way that is typically handled.

    The inquiry would be noted on the RECO web page file, perhaps using the inquirer’s registration number, only, until if and when further communication would be necessary.

    No offer details: just yes, there is a registered signed competing offer, or more than one, at that location.

    The cross reference protection is that everyone communicates using their registration number that ties them to RECO.

    The “kiss” principle (keep it simple, silly) in play. No one’s privacy is invaded.

    Details if needed for future use would be available only through direct intervention after the fact, by communicating with specific staff at RECO, honoured with the job-specific position of follow up and follow through. There’s no time to waste regarding the topic at hand, when a signed offer is in motion.

    Just thinking out loud how to combat the absolutely needed privacy issue. Offer “territory” falls in the realm of exacerbated secrecy “control.” The more so if competing offers are in play within the same real estate office.

    Historically it was often an in-house issue in the days when office secretaries typed offers, and office onlookers just happened to be looking over her shoulder. “Oh, my, Joe is bringing an offer on that brand new listing… It will never fly at that price. I know because the listing agent sits next to me, and he told me what his sellers would accept…” (We all heard those conversations. In some offices secrecy was impossible. Listing files were in unlocked reception area drawers complete with copies of conditional offers with escape clauses.

    One might expect that not all agents are wiling to let it be known far afield that “they” are preparing to present their buyer’s offer at XYZ address. Thus the web page would only identity agents by number.

    And is it stressed anyplace (don’t see it in Bill 55) what the penalty is for non-compliance? for not letting “RECO” know there are registered offers?

    Even if it is a mental juxtaposition for getting oneupmanship only; first guy in sometimes gets the deal.

    There’s no need for this to travel the “complicated” route to the finish line, folks! but the new Bill 55 just might elongate an already sometimes exasperating procedure?

    Carolyne L ?

  3. Michel,

    Regarding your following quote:
    ” I was told that “offer coming from a buyer directly” refers to “posted listings” situations where the buyer deals directly with the seller. This was very surprising to me, that the brokerage will now be involved with offers on these types of listings when initially the broker was asked to only put the listing up on MLS for a fee. ”

    Michel, at what point would you potentially see the listing “mere posting” brokerage transitioning into an Agency relationship with their seller? If the listing brokerage is responsible to retain all offers they must also be responsible to collect them. If the listing brokerage is responsible to collect the offers then are they to be seen to be acting on behalf of RECO, so as to avoid any Agency transition?

    What if the “mere posting” seller refuses to accept the listing brokerage as a Deputy of RECO; do you suppose that the sale would just go through and everyone would just forget about it until the next one?

    I don’t think that there is a chain heavy enough to contain the “reckless beast” (mere postings).

    • Alan M.
      This is why I think that RECO saying offer comes directly from buyer means Dual representation, and not mere listing situation. My understanding is that there is no responsibility of the listing brokerage in a mere listing beyond posting on MLS and the content of what is posted. If RECO meant offer coming from buyer directly as a mere listing, then what if the seller does not inform the brokerage of the existence of an offer, is the brokerage responsible ?

      • Michel,

        It would make more sense that the reference to an offer: coming directly from a buyer would be in regards to a totally unrepresented buyer, who had approached a “mere posting” seller. I can however understand your doubt, since you are correct in that a brokerage that has listed the “mere posting” is only supposed to treat the seller as a customer.

        What is irrefutably clear is that it is simply impossible to expect to be able to have a reliable level of accountability with a “mere posting” seller with regards to all of our regulations and rules — because they aren’t accountable to any regulatory consequences, after-the-fact! Consequently, the aforesaid means that by default “mere posting” seller’s can’t be made accountable in the present tense. Were a brokerage to terminate the “mere posting” listing for failure to communicate the existence of an offer or whatever, the damage would likely already be done.

        The truth of the matter is that “mere postings” are absurd, because it is an outrageous proposition to mix unlicensed people in to a regulated business industry that requires licensed practitioners. If it doesn’t make sense to you then you probably understand it correctly — as the essence of “mere postings” is that they don’t make sense!

      • You raise a few valid concerns Michael. RECO needs to clarify unfortunately they do at times have a propensity to just cryptically explain the rules rather than be explicit especially when it comes to mere listings. It would make absolute sense that in the case of multiple representation the listing brokerage should retain failed offers from their buyer client(s).

        One of RECO’s publications did state in brackets that retention of the offer is required where the listing brokerage ‘receives the offers’ which would eliminate buyer direct to seller. The latest doesn’t have that terminology and instead mirrors the wording in the REBBA change where the change doesn’t make any mention of mere listers leaving the impression that mere listing brokerages must comply.

  4. Yes…is there or isn’t there? And Who’s? That is a question with an answer I’ve sometimes had to pull in stages from other salespeople and brokers. Most of us probably have been there and done that. And I fully agree…the good players are now paying for the bad ones. And what a price…a separate copy of every change and counter? RECO apparently can’t read the original document with changes as if they had become invisible. It’s so much overkill as to be ridiculous. I would (or maybe for my own sanity wouldn’t) love to hear the bureaucratic rationale that lead to that conclusion. At some point there needs to be a correction, an impeachment or a coup…copy that? … ..

  5. It might be worth noting that there seems to be no requirement in Bill 55, that the listing office as the “master point of control” be notified of the registration of an offer.

    1) One could expect that would be the natural implication, but we all know that is not the case. Often a buyer rep will register an offer with the listing sales rep. Not with the listing company per se.

    2) Much real estate business is conducted outside what could be referred to as normal business working hours.

    Many late nights and weekends, necessitating the need for working with answering services, in order to register an offer. And typically that message would eventually reach the listing agent, but perhaps not the company front desk person who keeps records of registered offers.

    Many buyer agents have experienced making a phone call to register an offer, asking if there are other offers, being told none registered “at the office” but caller needs to track down the specific listing agent (or team), to check if he or she has been notified of a registered offer on the subject property, instead of having registered at the office.

    3) Tracking down the listing sales rep is not always easy; even when leaving messages, or sending emails or faxes.

    Some listing reps are not easy to connect with, by any method. Others are superb. Time is of the essence, the more so if working with tight irrevocables. The buyer wants, needs, to know: ARE THERE COMPETING OFFERS, yes or no.

    4) On the topic of connecting with RECO to check if offers, or how many, are registered:
    Of course RECO works regular predetermined typical office hours.

    In order to comply in the “helping arena,” staff will need to appoint someone to be available with up to date information “check-ability” factors 24/7, to match up with the requirements to make available the necessary information that a buyer and his buyer agent needs post-haste.

    This is vital, due to the rush-about nature of an agent and the buyer communicating whether or not the buyer needs to increase his offer in order to compete.
    ***
    This is another instance of rules and regs being put in place with good intentions, but apparently no one considered the day to day logistics in play during the real life operation applicable in the real estate business.

    Respectfully,
    Carolyne L ?

  6. Michel, Quick Question??
    Has the Code of Ethics for RECO, OREA and CREA been modified without the public being told??
    All Codes require registrants who are aware of breach of legislation or regulation committed by a fellow member, to report said breach to the appropriate body. Has that changed??
    What am I missing here? Why were these rules added when “misrepresentation” requirements have been part of the legislation for decades! Are members in fact not meeting their Code requirements and being quiet about fraudulent actions ongoing??

  7. Unbelievable. We just get in deeper and deeper and deeper….paper trails get longer and longer and more complex with more legal responsibility upon the sales representatives. Makes one weary. Like the ad on TV these days, we are constantly reminded that “this is not an entry level position”. Go figure. A make work project brought on by bad apples. These apples should be boiled down, simmered, and turned into applesauce. No sugar added.

    • Dawna:
      Re your last sentence: Sugar will not make road apples smell any better, and that is what we are dealing with, too damn many road apples getting sucked into the business far too easily without proper pre-screening. Can’t discriminate…can we. That would be politically incorrect, but what is really politically incorrect is the infusion of n’er-do-wells into the system in trade for bureaucratic subsidizing dues-bucks…lots of them…on both counts.
      Jefferson said that the country with the most laws is the most corrupt country. Ditto for the industry with the most rules and regulations…due to the allowance of, yea, invitation of, low calibre personalities into a business environment meant for high calibre talent, morality and intentions…probably on a ratio of at least five-to-one in favour of the failures-in-waiting.
      Just took a break from sanding my new boat, and thought I would see what’s up on REM. I would like to see a Donald Trump kind’a personality take this industry by the gonads and shake things up a really big bit. “Y’er Fired!” would be heard many times both within the ORE bureaucracy as well as in the field of dreams.
      Back to my boat; it don’t give me no lip, just callouses and a sore back, but no head-shaking “I don’t believe it!” moments of incredulity.

      • This is what happens when WE the REALTORS behave badly. Regulators step in and make it worse. Maybe if REALTORS did not lie about phantom offers, the outcome would be different. I love the way we throw about the word Professional,
        and the regulator’s need to bring in this Bill due to licensee behavior.

  8. On top of everything else different companies are coming up with different policies which confuse Realtors even more as to what is right and what is wrong!

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