Should you disclose offer amounts to potential buyers?
We know the real estate market is under pressure, with properties selling above asking and sellers receiving multiple offers.This has led to a debate on transparency: should the amount of offers be disclosed during real estate transactions?
As you may recall, the current tension in the market comes from an imbalance between offer and demand. As long as there are few properties for sale and many active buyers, prices will continue to rise and selling times to shorten.
- See our 2021 market analysis
Is disclosing competing offers really the solution to cool down an overheated real estate market?
The regulation for real estate agents
Under the Real Estate Brokerage Act, agents are obligated not to disclose the amount of competing offers to purchase.
But DuProprio clients, or other owners selling property by themselves, are free to disclose, or not disclose, the amount of the offers received from other potential buyers. Each seller is free to decide how to conduct the negotiations.
To each their own strategy
“Some clients are comfortable telling potential buyers how much they’ve been offered so far, while others are not,” said Martin Desfossés, DuProprio real estate coach. “Those who aren’t are generally influenced by how things are done in the industry. But regardless of a client’s preference, our team is there to advise them and help them establish a selling strategy that will meet their particular needs.”
Naturally, every property owner wants to get the best offer possible, including the best price, but also the best selling conditions such as the right possession date and appealing inclusions/exclusions.
In a market where sellers have the advantage, it’s the competition between buyers and the speed of transactions that are making prices rise. Ultimately, buyers must decide the maximum price they’re willing to pay for a given property.
Ways of proceeding
Here are two strategies that sellers can use when the offers come in, while making sure to respect the timelines included in the offers:
- Decide to keep the offers confidential: The seller examines each offer and selects the most interesting.
- Openly inform potential buyers of the best offer received: The seller may receive fewer new offers, but they will be competitive.
In either case, the seller can then contact selected buyers to see if they want to up their offer. Once again, the seller can choose to reveal the other offers received, or not.
Which is more profitable?
“In fact, you can never guess how much a buyer is ready to spend because budgets, needs and priorities vary from one person to the next,” stated Martin Desfossés. “Whether or not potential buyers know the amount of a competing offer, they decide whether they want to make a high offer or not, and whether they want to keep their offer as is or increase it.”
Each of the above approaches has its advantages. For example, if you choose to maintain the mystery, you could receive an outstanding offer. On the other hand, if you choose transparency, you could reach an agreement with the buyers of your choice rather than seeing them bow out of the race under pressure.
A transaction with a personal touch, at your own pace
In a market where everything seems sped up, having the opportunity to establish a trust-based relationship with a buyer and having the freedom to choose how negotiations will take place are just some of the many advantages of selling without an intermediary. But most of all, you will not be pressured or hurried in your decision.
In fact, about 2 in 31 Quebecers surveyed consider that selling a property without an agent has never been easier than it is now!
While direct, personal communication makes for a smoother transaction, our clients also have access to real estate coaches and notaries to help them market their property effectively and conclude a transaction that’s compliant and rewarding.
Contact us at 1-866-387-7677 to find out more about our services!