What RECBC & OSRE's Statement on "Heightened Market Activity" Means for REALTORS®
On Friday, April 9th, the Real Estate Council of BC (RECBC) and the Office of the Superintendent of Real Estate (OSRE) released a press statement encouraging British Columbians to be aware of the potential risks and do their research before making an offer on a home. In the release, RECBC's Chief Executive Officer Erin Seeley offers four tips for consumers:
- Understand the risks of subject-free offers
- Be realistic about what you can afford
- Ask questions to ensure you're comfortable with the listing price and marketing strategy
- Be prepared in a multiple offer scenario
For REALTORS®, these tips underline the importance of setting expectations and managing risks. Let's take a closer look at what RECBC's tips mean for Realtors and how the BCREA Multiple Offers Resource can help you navigate the current heated real estate market.
1. The risks of subject-free offers
In working with buyers, it's important to have the conversation about the risks of writing offers with limited conditions or that are unconditional early in your relationship. By the time a buyer has seen a property that meets their needs, their excitement may cloud their judgement. Outlining the risks before they've gotten emotionally invested in a property positions you as their trusted advisor and helps ensure they understand the risks of not doing their due diligence a before they begin their search.
But it's not enough to just have those conversations. You should also ask the buyer to confirm in writing that they understand that it would be in their best interest to make their offer subject to:
- Receiving and approving a home inspection;
- Confirming their ability to obtain financing;
- Confirming their ability to arrange fire insurance; and
any other due diligence that's important to them.
2. Acting in clients' best interests and what your client can afford
As a Realtor, your role is to know your clients and act in their best interests. Now more than ever, this means helping clients understand current market realities so they can make informed decisions and set realistic expectations. For example, buyers may not realize that the homes they've seen listed in their price range on REALTOR.ca could sell for substantially over the listing price.
Be sure to advise them of the importance of doing their due diligence, including speaking to lenders to determine what they can afford. Buyers should also be reminded of the ancillary costs in a transaction.
3. Ensuring clients are comfortable with the listing price and marketing strategy
Prices have been rising so quickly in many parts of the province that even the most recent sales data may not represent current market realities. This can make it challenging for Realtors and sellers to determine an appropriate asking price based on recent sales of similar properties. It's important to know your client and their needs so you can customize a marketing plan and evaluation specific to their goals. Be sure to discuss different pricing strategies with the seller, including the opportunities and risks of different approaches and how they will consider offers.
4. Being prepared for multiple offer scenarios
Whether you're representing a buyer or a seller, ensuring all parties involved know what to expect from a multiple offer scenario will help the process go smoothly. In addition to making sure clients understand the practicalities of a particular multiple offer scenario (for example, whether offers will be delayed for presentation, whether bully offers will be considered or if there are any terms attractive to the seller), it's important that buyers and sellers understand that Realtors have fiduciary duties to the client they represent and how this impacts the information shared during a multiple offer scenario. It may also be helpful to ensure clients understand that Realtors must follow the Real Estate Rules, REALTOR® Code and Board Regulations when it comes to the offer process and multiple offers.
For example, while a buyer may ask their Realtor to inquire how their offer compared against other offers, the seller may not wish to disclose this information and the seller's Realtor cannot disclose this information without instruction from their client to do so.
Navigating Multiple Offers with BCREA's Multiple Offers Resource
BCREA has created a Multiple Offers Resource to give Realtors easy access to practical tools to help make multiple offers go smoothly. This 17-page resource includes checklists on what to discuss with buyers and sellers, a Buyer's Acknowledgement of Information- Recommended Conditions form and a sample letter to buyer's agent on what to expect in a multiple offer scenario and other resources.
The Multiple Offers Resource is based on BCREA's course Multiple Offers - The Strategies, The Tactics and The Game Plan.
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