It’s about time double ending real estate transactions reached the media. And for good reason. For the past few years, as Toronto real estate has heated up, buyers and sellers have experienced multiple offers and bidding wars as the norm.
What double ending real estate transactions mean
Double-ended, or double ending real estate transactions basically means one realtor represents both the buyer and the seller. In the province of Ontario, there is no rule or regulation that prevents this from happening. But in other provinces, realtors can only represent either buyer or seller.
To give you a more in-depth illustration of how this can affect a deal between buyer and seller, note that lawyers can’t represent both parties. If you buy or sell a home, the buyer’s lawyer and seller’s lawyer will never be the same firm. It’s simply a conflict of interest.
When it comes to realtors, why is double ending real estate transactions allowed? And what’s preventing a realtor from favouring one side, or the other, if they’re representing both parties?
That’s the question the media, namely CBC, asked when it did its investigative report into the practices of double ending real estate deals.
If you’re selling real estate…
…you want to make sure your real estate broker is working on your side.
So what happens if you hire an unethical realtor who is only interested in how much commission money they’re going to pocket with your deal?
Let’s talk about a scenario where this could happen.
Your realtor has just listed your home for sale. And, as they’ve discussed with you, they’re going to help you hold back offers to a set date so that a bidding war will ensue.
A few days before the supposed bidding war or multiple offer date, an inquiry comes in directly to your realtor.
A buyer, desperately wants to make an offer on the house.
They don’t want to wait for the set bidding date.
They want it now. And they’re willing to do whatever it takes.
How will this play out
If you, as the seller, wait for the date all offers will be presented, you create a market with limited supply (your one house) and a high demand (multiple buyers). Scarcity drives prices up, right?
What would happen if you entertain just one buyer… days before the multiple offer is set… could you possibly get the highest price on your home, or would you be leaving money on the table?
Perhaps your realtor will convince you they’ll get the most amount of money from the buyer as possible. That they’ll pay the highest price. But how will you possibly know this, especially when it’s the only offer on the table?
But let’s look at something you may, or may not, know.
When your realtor takes this one offer, ahead of the multiple offer date, it is essentially a double ending real estate transaction.
Which means… cha-ching… they make commission on both the listing and the selling side.
Not that there’s anything wrong with that.
In fact, if your realtor properly explained the listing agreement you signed with the brokerage, their brokerage is entitled to the entire commission IF they represent both the buyer and the seller.
In certain situations, this could work out well for you.
But in a multiple offer situation, where buyers are demanding homes amidst scarcity — are you leaving money on the table by entertaining just one bid?
The answer: yes
And no realtor should convince you otherwise.
Think about it from a logical perspective.
If a week from now, ten buyers or more are bidding on your one house, and today, one buyer wants to sneak in their offer ahead of the line, in which scenario would you get the highest price for your home?
Definitely on the multiple offer date.
Unless your realtor has a crystal ball and ‘knows’ what the highest price a buyer will ever pay for your house… a week from now… and somehow convince the one buyer who wants their offer to be seen today to pay MORE than that price… there’s now way you’re going to sell your house and get the most amount of money. Period.
The flip side
What if the multiple offers don’t come?
What if today’s buyer is THE ONLY buyer who will make an offer on your house?
And, by not listening to your realtor and entertaining this bully offer, you don’t end up selling your house?
Truthfully, unless your realtor deliberately overpriced your home… or did not market your home effectively… this will not happen.
In today’s heated market, statistics and previous sales will show homes selling well over asking price and in many situations with more than one offer.
What you should do
I’m not saying every realtor is like this. I know many in my circle who only put their clients’ best interests first, and would never imagine double ending real estate transactions instead of getting more money for their sellers.
At the same time, you shouldn’t ignore the fact that this is happening. And if you’re aware of the process and the possible outcome of double ending real estate transactions, you’ll know when your realtor is acting in your best interest… or their own interest.
Do your research before hiring a realtor.
Have them explain the scenarios of multiple offers and double ended situations.
Ask them what they will do if a buyer comes in wanting to make an offer before the offer date.
And definitely ask them how they will give you the highest selling price and more money if this situation were to happen.