Multiple offers, clients lined up outside the property of choice all waiting for the final decision. Will the house be mine or will the house be yours. Not a position anyone wants to be in and certainly a process that raises a persons blood pressure to say nothing of their expectations.
There is talk of phantom offers. A phantom offer is a reference to a possible verbal bid brought by the sellers’ agent. The offer is not registered and often it is not presented as the other offers are presented and there is rarely a record of the offer. Allegedly phantom offers are used by selling agents to spark extra rounds of bidding or to spook potential buyers into rushing or raising offers
The practice is considered a breach of ethics under the Real Estate and Business Brokers’ Act of Ontario – administered by the Ontario council – and realtors who are caught face hefty fines. The practise is consider unethical by most realtors, although knowledge of the phantom offer is wide spread.
An informal poll of 30 Toronto-area agents by the Star suggests all believe that phantom bidding exists in the market. More than two-thirds said some kind of structural reform in the way bids were handled was needed to address the problem.
Maureen O’Neill a past president of the Toronto Real Estate Board has come out strongly against this practice. “It’s dirty realty, it really is,” She said of agents who fabricate offers during bidding wars.” O”Neill advocates that Realtors engaging in this practice should have their licenses revoked – not allowed to practice real estate at all.
The province is addressing the issue of ‘phantom offers’ by instituting a higher level of transparency with competing offers in real estate transactions. The legislation sets out two principle requirements. The offers must be in writing and all offers must be retained for a defined period of time.
Will this totally eliminate the practice of Phantom offers? Unlikely… But once a number of realtors are heavily fined and their clients are humiliated there will be change. The market will insist on …