— We take our content seriously. This article was written by a real person at BREL.

(Note: We wrote this article in 2012 and there have been many rules changes since then).

There has been ample talk in the media this spring about Toronto bidding wars, and this recent article in the Toronto Star Stiffer Bidding War Rules Sought After Buyer Pays $90,000 over-asking has got my blood boiling.

The story: a Buyer thought they were competing for a house with 3 other offers – they offered $90K over asking, only to find out there were never any other offers. The article doesn’t give a ton of detail – for example, I’d love to know WHY they thought there were 3 offers – but nonetheless, I feel compelled to clarify the current bidding war system and share my thoughts about how I think the process could be improved.

When a buyer signs an Agreement of Purchase and Sale (offer), their agent is supposed to officially record it with the listing brokerage – we call this ‘registering an offer’, and it’s basically a way of tracking offers. No details of the offer (price, conditions, etc.) are disclosed – just the fact that an offer has been signed and the name of the buyer agent and their brokerage.

Agents who represent buyers can call the brokerage any time to  find out how many offers are registered – in fact, they can also ask the listing agent for a list of which brokerages will be presenting offers. When my buyers are competing in bidding wars, I keep a tally of the number of offers throughout the day and always call right before I present my offer. I also make a point of asking the listing agent if he is also representing any buyer clients (this is a rant for another day), which could mean his client might be at an unfair advantage over my client.

If the number of offers changes (up or down), agents participating in the process are supposed to be notified. If there were 3 offers but one person backs out, all the agents have to be notified. If there were 2 offers and now there are 6, all agents must be notified. When I start my offer presentation, I ask the agent straight out: what’s the offer count right now?

Of course the whole system is based on the fact that sellers won’t get their friends to put it fake offers (phantom offers) and realtors will actually work in the best interest of their client and play by the rules. It’s not a perfect system. It’s not even close.

The most interesting part of the article in the Toronto Star was of course, the comments – angry people who feel that a seller shouldn’t have the right to look at multiple offers. But if you were the Seller, wouldn’t you want to sell to the person who wanted to pay you the most for it? Houses are personal – it’s not like buying a TV, where there are millions of the same product out there. How much a house is worth to someone is dependent on their personal motivations – and no Seller or agent ever knows what offer price those motivations will result in. And to all the commenters who think real estate agents use bidding wars to make more money – it doesn’t work that way. A couple of extra hundred dollars in commission because of a higher price will never be worth having to take my buyer clients through the offer process multiple times.

Is there a better alternative to the traditional bidding war? In Australia, houses are sold by open auction- think art auction with numbered paddles. Sounds good in theory, EXCEPT the part where the person who is competing with you might actually be the Seller and you don’t know it. That doesn’t sound any better in my opinion. Some developers have tried the auction approach for new condos in Canada and the US  to mixed results – buyers make bids, but then the sellers turn down many of the ‘winning’ bids because the prices weren’t high enough.

So what can we do to improve the bidding war process in Toronto?

  • I’m a fan of the mandatory requirement to provide a written list of the names of the brokerages who have signed offers.
  • I don’t think a realtor should be allowed to represent both a buyer AND a seller during a multiple offer.
  • I believe the Real Estate Council of Ontario should publicly discipline the heck out of the agents who participate in shady bidding wars – including taking away their licenses.
  • I also think that the good real estate agents need to band together to break the code of silence and expose unethical practices. Realtors are often hesitant to bring accusations forward for fear of further tarnishing the reputation of their industry – but if we don’t fight against them, we become them. 

Click here if you want to read more about bidding wars…otherwise, I’d love to hear your thoughts below!




  1. D'Ann Bartley, REALTOR® says:

    In California we have no obligation to register offers, and we are currently experiencing multiple offers (bidding wars) on our meager supply of listings, at least in my market area on the Central Coast. We have only about 90 some listings (houses and condos) at any time in the past few months, so it is extremely competitive. By the time I took buyers out to see 4 homes last night, all 4 had offers, ranging from 1, 4, 9 and 12. Why bother showing? And when the offers are ridiculously over the asking price, assuming the asking price is at market value, will the appraisal come in? Are sellers being swayed by dollar signs instead of reality? They will end up having to negotiate down to the appraisal value, or the buyer will have to pay cash for the difference, if they can’t meet in the middle. Well it’s ugly out there, and yet you at least have that edge of having to register offers — I agree, even that system can be manipulated, but it’s better than what we have: nothing. Crazy times!! 🙂

  2. I think anyone would be furious if they found out that they paid $90 000 more than what they needed to! There should definitely be a better legal skeleton that would serve as a catalyst during the process.

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