Hold‐back strategies can fuel bidding wars but also work against the home seller ￼￼
Home sellers who want to use a hold‐back strategy for offers must request it in writing.
I’ve heard that sellers sometimes try to generate interest by holding back offers until a certain date. But what if a really strong offer ￼comes in early?
It’s true that a seller can tell their representative to hold back offers. It’s an issue I wrote about from the buyer’s perspective in last week’s column. This week, I’d like to examine the issue from the seller’s side.
In hot housing markets like the GTA, sellers sometimes instruct their real estate agent to hold all offers until a specific date and time. It’s a strategy that is intended to increase interest in a property and lead to multiple competitive offers.
But before you decide to go with this approach, it’s important to remember that there are advantages and disadvantages to the strategy.
While you may generate the elevated interest you’re looking for, you do run the risk of losing out on a great offer from someone who’s not inclined to wait for your specified time. So you should have an in‐depth conversation about this tactic with your registered real estate representative to understand the potential risks and benefits.
If you decide to proceed with this hold‐back strategy, you will need to provide your agent with a written direction that explains exactly how they should handle offers. Your broker or salesperson must follow your direction to the letter, so it needs to be very specific to ensure the proper course of action is clear.
Getting back to your question, what happens if a buyer comes in with a very attractive offer before the date and time you have set? This is where your direction to your representative comes into play.
Even if you set a date and time that you want to receive offers, you can indicate that you want to be advised of any offers that come in early. Or you can state that you want to be told about any offers above a certain price — or those that also offer a large deposit. These details are important if you are concerned about missing out on a generous offer just because you set a certain deadline.
As you consider your approach with you real estate professional, think carefully about your sales strategy and any potential “gotchas” you may encounter. For example, holding back offers is intended to increase interest, but it could also discourage would‐be buyers who don’t want to get involved with the bidding war that often results. Or, if the offer date passes and there have been no offers, prospective buyers might assume that the property is overpriced or perceive it as being less desirable.
It’s also important to note that you can change or remove the direction at any time, but it has to be in writing, and you must initiate the action. Your representative will then need to notify any interested parties about the change. Your agent is not allowed to tell you about an offer and then discuss whether you want to change your direction. This is to ensure the integrity of your strategy.
Ultimately, delaying offers can be a viable part of your sales strategy. But talk to your real estate representative in detail about the repercussions and carefully think about how it could play out when your home goes on the market.
Joseph Richer is registrar of the Real Estate Council of Ontario (RECO). He oversees and enforces all rules governing real estate professionals in Ontario. Email questions to firstname.lastname@example.org . Find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps .
This article originally published in the Toronto Star, Sep 27, 2014