Lower Mainland (BC) introduces Disclosure of Multiple Offers Presented (DMOP)

Real estate boards in the Lower Mainland of British Columbia have approved a new rule requiring the full disclosure of multiple offers. The Real Estate Board of Greater Vancouver (REBGV), Fraser Valley Real Estate Board (FVREB) and the Chilliwack and District Real Estate Board (CADREB) are implementing a new disclosure form.

What is the DMOP?

The rule, which goes into effect on July 17, 2023, requires listing agents to complete a Disclosure of Multiple Offers Presented (DMOP) form before they present any offer in a situation where there are multiple offers. The form must include the following information:

• The number of offers received

• The name of the real estate brokerage representing each offer

• The date of the offer

What is not included in the Disclosure of Multiple Offers

To protect the buyer’s privacy, the disclosure does not include:

• Which offer was the winning offer

• The prices offered

• The specific terms of any offer

• Whether any offers were withdrawn

• The reasons the seller accepted or rejected any of the offers

If it doesn’t tell the buyer why they lost the bidding war, why do it?

The DMOP form is intended to provide some transparency for homebuyers, so they can feel assured that when they have been told there was a bidding war, that they were not being misled.

The disclosure is made after the bidding war is complete, so it doesn’t make the bidding process more transparent or provide buyers the chance to improve their offer.

"This new form will help confirm and bring comfort to prospective home buyers in the region that every offer was fairly presented and considered in the process. The real estate profession believes that this change will help inform the public and build greater trust in the real estate transaction process — specifically in instances when competition and emotion run highest."

Jeff King, REBGV CEO

It is designed to prevent listing agents from misleading homebuyers about the number of offers they have received or the terms of the highest offer.

Does this disclosure solve a real problem?

The new rule is part of a broader effort by real estate boards in British Columbia to address concerns about the fairness of the housing market.

In recent years, the housing market in the Lower Mainland has become increasingly competitive, with bidding wars and multiple offers becoming the norm. This has made it difficult for many homebuyers to compete, and has led to concerns about price inflation and market manipulation.

In some cases, there has been market manipulation and this new disclosure will go some way toward eliminating manipulation.

Quebec real estate agents made fake offers to spark bidding wars

• B.C. Realtor who faked an offer and threatened a colleague has their licence suspended. (CBC)

• B.C. Realtor informed the buyer agent for a prospective buyer that he had received a written offer on the Property when that was not the case; and at a later date, while negotiating a counteroffer, failed to advise her that another written offer had been presented to the seller. (BCFSA)

• B.C. Realtor tells buyer's agent an offer was presented to the seller and was rejected when he had never presented the offer to the seller. (BCFSA)

While this type of behaviour wasn’t common, it occurred often enough that even without the disclosures, real estate agents got caught pulling shenanigans and disciplined. The bad behaviour was likely much more common than most industry insiders would like to admit. However, it is conjecture because you can’t count the misdeed of professionals who haven’t been caught.

Concerns with the Disclosure of Multiple Offers Presented (DMOP)

While the DMOP will ensure that all offers have been presented to the seller, it does not prevent a real estate agent, who is determined to mislead sellers, from coordinating collaborators working for different brokerage to make multiple offers on a property that are priced well below asking. This would inflate the number of participants in a bidding war, allowing the selling agent to apply pressure to the buyer, while still providing a compliant Disclosure of Multiple Offers Presented (DMOP).

While that type of behaviour would be unethical, it is reasonable to expect that some real estate agents might come to an arrangement among trusted collaborators to help each other in this respect.

A benefit of the Disclosure of Multiple Offers Presented (DMOP), is that it creates a paper trail so it will be easier to uncover unethical practices.

For example, a regulator could search to see if the same three bidders make offers on all properties sold by a particular real estate agent. That would be a red flag that triggers an investigation.

What’s next?

It remains to be seen how effective the new multiple offer disclosure rule will be in addressing concerns about the fairness of the housing market. However, it is a step in the right direction and it provides more transparency for homebuyers.