New Phantom Offer Law: All You Need To Know About Bill 55

You may have heard about Bill 55 that will take effect July 1. This new piece of legislature deals with multiple offer scenarios and aims to eliminate “phantom offers”.
Need some clarity? Read on…

What is a phantom offer?
A phantom offer is an offer that doesn’t actually exist but is used by a Listing Agent to make Co-Operating Agents believe they are competing in multiple offers. Let’s say I have a Buyer who wants to put in an offer on a condo. If the Listing Agent were to tell me there’s another offer on this property, my Buyer would in most cases need to increase the strength of their offer by:
1) offering a higher price
2) offering a larger deposit
3) removing conditions from the offer
The end result is that the property sells for higher price than it would have sold for had there only been only one offer.

How does this effect Buyers, Realtors and Brokerages?
Buyers will now be able to access (after the sale has occurred) information from the Listing Brokerage regarding the official number of offers.
The Listing Brokerage will need to keep all offers and sign backs for each property for proof in the event a Buyer is interested in knowing.
If there were actually fewer offers than what the Listing Agent suggested, then the Buyer (who didn’t get the house, remember) will have grounds to sue the Listing Agent and his/her Brokerage who is subject to heavy financial and regulatory penalties.

Have I encountered any Phantom Offers out there?
It’s hard to say. I’d like to think that most agents adhere to our strict Code of Ethics but one never knows. I’m pretty diligent in probing any Listing Agent I might be leary of and will not hesitate to ask for the name the other Agents and Brokerages. Newer agents may not be as savvy.

Let’s just say this: if there really have been a lot of Phantom Offers and because of Bill 55, there are a lesser # of them, then am I correct in assuming there will be fewer overall offers on desirable properties? I think not.

Bill 55 will need to stand the test of time as to it’s viability in the real world. Until then, all I know is that Bill 55 won’t be saving any trees. Enough said…