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Real Estate

Ban bully offers, double-ending to improve fairness: Samaroo

Banning bully offers and double-ending by realtors would make the real estate market fairer for consumers, says Toronto real estate lawyer Sarita Samaroo.

CBC News reports that the Ontario Real Estate Association (OREA) has written to the provincial government, urging it to prohibit “bully offers,” where buyers impose a short deadline for the acceptance of a bid, typically at or above asking price, but before the established offer date. According to the news outlet, the move is usually designed to avoid competition by pressuring the seller to accept the early bid.

“I absolutely agree that this unfair tactic should be ended,” says Samaroo, principal of SST Law Professional Corporation. “Ensuring that all fair offers come in and are presented properly to the seller is crucial in order to preserve trust in the market.”

According to the CBC story, the recommendation is just one of 28 made by OREA on behalf of its 78,000 members, as part of the government’s current review of Ontario’s Real Estate and Business Brokers Act, which has not been significantly updated since its introduction in 2002.

Another OREA suggestion is that the province ban “escalation clauses” in offers, which automatically kick in to increase the purchase price over a higher competing offer. The organization’s president told the CBC that these clauses can tempt unethical sellers to fill in an offer that may not reflect the next highest bid, making for a “very uneven playing field.”

“These types of practices are what caused the unreasonable prices we saw in the market a few years ago, and which seem to be re-emerging once again,” Samaroo tells AdvocateDaily.com.

In addition, OREA wants the province to boost the power of the Real Estate Council of Ontario, the industry’s regulatory body, to investigate and discipline rule-breakers.

But Samaroo says she would go farther, identifying the practice of double-ending, in which a realtor acts for both the vendor and the purchaser on the same deal, as one of the most problematic in the industry.

“Many of these problems are caused when realtors are involved on both sides of a deal, and I would say that double-ending is a bigger ethical issue than a bully offer because you can’t properly represent the interests of both parties,” she says. “It’s not fair for consumers, and it shouldn’t be allowed because sellers don’t know if they’re getting the best bid, while buyers don’t know if they’re getting the best value.”

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