Although it's not a significant problem in this market, phantom offers aimed at increasing the hype and subsequently the number of offers relative to a property are now said to be the focus of changes being considered by Ontario's Consumer Services Ministry according to a recent article in the Toronto Star.
Also mentioned in article are further considerations by the Ministry that will provide consumers with easier access to a variety of unbundled real estate services now being offered by non-traditional real estate brokerages or service providers.
At this point in time there is no formal means by which real estate brokerages are required by law to handle multiple offers, most brokerages however do have their own in-house policy in this regard to protect both their clients and themselves. In the GTA, multiple offers on a highly desirable property are commonplace. REALTORS® are obviously not allowed to disclose the terms of various offers to other REALTORS®, only the sellers are privy to the information contained in various offers. It has happened however where a buyer submitted an offer on a property with the understanding there was more than one offer only to find out there was not. At times this may be an innocent situation where another buyer simply decided not to get into a bidding war and withdrew their offer. There have been times however when a REALTOR® alleged there was another offer on a property in order to induce multiple offers and or to force other buyers to pay closer or even more than the asking price. New legislation is in the works to prevent what Ontario’s Consumer Services Ministry sees as misleading and abusive practices in the marketplace.
Another change being considered pertains to commissions. At this point in time it is illegal for REALTORS® to charge a commission based on multiple facets ie: a set fee (dollar amount or percentage) plus a secondary fee in addition to the base amount. Example: A flat fee of $2,500 plus a percentage commission of the sale price is not allowed. This too may change under any pending new legislation.
REALTORS® licensed in Ontario operate under strict guidelines stipulated in the Real Estate and Business Brokers Act 2002. The Real Estate Council of Ontario enforces the act on behalf of the Provincial government and further imposes any penalties against REALTORS® that are deemed to have failed to meet the Act's requirements.
Watch for further postings wherein I will keep you updated as to any changes that may get legislated in the future.