Offer Night and Bidding Wars: Your Rights as an Ontario Buyer

Offer night can feel like a race. The listing says offers will be reviewed on a set evening, you suspect several other buyers are interested, and you have a short time to decide how much to offer and what to ask for.

Knowing what you can and cannot find out, and what the seller is free to do, helps you stay calm and make a considered offer. This article explains the basics for Ontario buyers. A lawyer can review your actual offer before you sign.

What you are entitled to know about other offers

If you have made a written offer and there are competing offers, you are entitled to know how many other offers there are. That is the limit of it. You are not entitled to see the other buyers' amounts or their conditions.

So if someone tells you there are "five offers", you can ask for the number. You should be cautious about anyone who claims to tell you exactly what the others offered, because that is not something a buyer is entitled to receive.

What the seller is free to do

When an offer arrives, the seller may accept it, reject it, make a counter-offer, or ask the buyer to revise it. With competing offers, the seller may negotiate with one buyer while setting the others aside.

The seller also does not have to take the highest price. A lower offer with better terms, such as a firmer closing date or fewer conditions, can be the one the seller prefers. This is why price alone is rarely the whole story.

• Accept the offer as written.
• Reject it.
• Counter with different terms.
• Ask you to revise your offer.

Conditions in a competitive offer

Many buyers are tempted to drop conditions to stand out. Before you do, understand what a condition does. A condition such as a satisfactory home inspection must be waived or performed by the agreed time before the deal becomes binding, and it must be used in good faith. Once all conditions are waived, the agreement is firm and binding.

Offers can also arrive after the seller has already accepted a conditional one. A conditional agreement is not final and binding until all its conditions are met or waived, so the seller may still consider other offers. The seller usually protects itself with an escape clause that requires notice to the first buyer and gives that buyer a set time, for example 48 hours, to waive or satisfy its conditions.

If the first buyer waives or fulfils the conditions within the deadline, the seller must sell to that first buyer on the original terms. If you are the backup buyer, your offer should be conditional on the first deal ending, so the seller does not end up selling to two buyers.

The deposit and timing

In a real estate deal the deposit is normally held by the brokerage in a real estate statutory trust account. It can be released only with a mutual consent or release signed by all parties, or under a court order.

Be ready to pay the deposit when the agreement requires it. Paying a deposit late or withholding it can itself breach the agreement, and the seller may then have grounds to terminate and seek damages. In a bidding war, a seller who already has other offers in hand may not be patient.

What to do before offer night

• Decide your walk-away price ahead of time, so the pressure of the moment does not decide it for you.
• Ask how many competing offers there are, and remember you are not entitled to their amounts or conditions.
• Think hard before waiving a condition; once all are waived the agreement is firm and binding.
• Confirm how and when the deposit will be paid so it is not late.
• Ask about permits for any renovations, since a building permit is required before most construction, additions, renovations and changes of use, and the municipal building department can confirm what permits exist.
• Have a real estate lawyer look at the offer and any conditions before you sign, if time allows.

Frequently asked questions