In certain market conditions, buyers may find that more than one buyer is interested in a property.
This is a competing offer situation and creates unique conditions in a real estate transaction. Buyers need to consider how to respond when presented with a competing offer situation. Working closely with your real estate agent will ensure that you understand the process.
Your real estate agent represents your interests in the transaction. You make the final decisions related to your offer, including the important decision of whether you want to participate in a competing offer situation.
Number of competing offers
In Ontario, the seller’s real estate agent is required to disclose the number of competing offers to all buyers who have submitted a written offer.
Content of competing offers
In Ontario, sellers choose how much information, if any, they want to share about the offers they receive. Sellers are not required to share this information and agents working for sellers are not permitted to share any of the content of the offers unless the seller directs them to.
You should not expect the content of other offers to be shared or, if shared, that the information will include the offer price, closing date, or other specific information.
As a buyer
- You decide whether you want to participate in a process where the content of your offer might be shared with other buyers.
- Your agent can tell you the steps to take to avoid having the content of your offer shared with other buyers.
- Be aware that the seller can make the decision to share the content of offers at any time. You may not know in advance. You may not know what parts of the offers will be shared.
Tips for buyers in a competing offer situation
In a competing offer situation, you may be tempted to offer more for the property than you planned to and/or remove conditions from offers that are intended to protect you.
Before participating in a competing offer situation, you should consider factors such as:
How much can you afford to offer for the property and how much is the property worth? A high offer could enhance your chance of success. However, it may not be the best long-term financial decision for you. A competing offer situation does not necessarily mean that a property will sell for more than the asking price. Similarly, an offer that meets or exceeds the asking price will not guarantee that the offer is accepted.
Be aware that pre-qualifying for a mortgage does not safely eliminate the need for a financing condition in an offer.
In competing offer situations, it can be tempting not to include a clause in an offer that makes it conditional on a home inspection. While your offer might be more acceptable to the seller, you may later learn that there are property defects, required repairs or needed upgrades that you weren’t aware of. In some cases, this can be expensive in the short or long-term. Foregoing a home inspection is a significant risk that a buyer needs to carefully consider.