In the past, the Direction Regarding Presentation of Offers (DRPO) form would notify interested parties when the offers on a home would be viewed. This would allow buyers to view the property and decide if they should invest. However, if the sellers received a strong offer during this period, the DRPO form could be revoked or changed.
James and Denny explain how the Irrevocable Direction Regarding Presentation of Offers (IDRPO) differs from the previous form and share how the extra limitations put in place could affect you when buying or selling a home.
This episode will cover the definition of a bully offer, the importance of communication between selling and listing agents, instances where this new policy can benefit or hinder those involved, loopholes that Realtors can find to bend the rules, the issue of who will enforce these new initiatives, and the upcoming cooling-off period starting in January.
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Read the Transcript Here
Hi everyone, I’m James Garbutt. And I’m Denny Dumas. And this is the Garbutt Dumas Real Estate Podcast.
Denny: Ok, a couple of changes that have just recently happened..
James: Can I announce the form title name Denny?
Denny: You may, yeah.
James: It’s the “Irrevocable Direction Regarding Presentation of Offers”.
Denny: So this came in a couple of weeks ago. We, in the real estate world, we did have a form called the “Direction Regarding Presentation of Offers” (DRPO). That is something that a seller signs to say: “Hey, you know, we’re listing on Monday, the 10th. We’re not going to look at offers till Monday the 17th.”
That form could be discounted, could be revoked, if the seller got a really strong bully offer in the first couple of days on market and in writing told their real estate agent to work or adjust this form.
Now this obviously causes problems with Realtors that have seen the DRPO posted on MLS and see that okay, they’re doing an open house on Saturday, they’re not looking at offers till Monday, no stress. Me and my client will wait ‘till Saturday, go to the open house and potentially write an offer on, on Monday. There was a number of times where agents would not relay that they were dealing with a strong offer early in the listing and then Saturday would come around. Realtor number two and client would show up at the open house. There’s a sign posted on the door saying: “Property sold no open house today”.
That can be very frustrating for consumers and it is extremely frustrating for Realtors, the lack of communication there. So what the industry has done now is announced this new form
James: “Irrevocable Direction Regarding Presentation of Offers” which is replacing the “Direction Regarding Presentation of Offers” so they’ve added “Irrevocable”.
Denny: So essentially what it means is if a seller signs this saying we’re not looking at offers till next Monday, you cannot adjust that. You cannot accept the offer early. Now, like anything in real estate, there’s probably going to be ways around this. But…
James: Well Denny, I want to I want to first say I’m excited about this one. Mainly as like when you’re excited watch a new movie, not as excited implement the actual form. But the, I thought the intent behind the direction, the old for, the DRPO, “Direction Regarding Presentation of Offers”. I thought the intent behind that was, it was great you know? It was, there was, as you said a lot of crushing moments for people when they’d say one thing and then they take an offer without notifying other interested parties and people were frustrated.
And then they came up, came up with the first form and that was supposed to solve the issue. But then people would do things and then revoke that form and take a good offer anyway if they got a really good offer. And the whole purpose of this and I’ve read through the form I’ve highlighted some of the key words here is, it is night and day irrevocable for the period that you sign it. And it’s in, is now the time to go into that part? Because I just want to like, just highlight some of the language. It may not be altered it may not be amended.
So if you agree to not look at an offer date, if you listed tomorrow. Say you listed on Monday and you said we’re not gonna look at offers until the following Monday. This is irrevocable to the point where if, if your Realtor receives an offer that’s $100,000 over your asking price on day two of being listed, that Realtor is supposed to, from my understanding this form, refrain from presenting it to the seller until after that date.
So as you hire me to sell your home, I get you to sign this form because we think it’s the right strategy. I have to inform you of the pros and cons of this. If we say we’re not looking at offers till next Monday, we’re gonna get to seven days of exposure before we look at offers. We can’t backtrack on that no matter what anymore. Whereas before we could backtrack on it. You can revoke an offer but you can’t revoke an “Irrevocable Direction Regarding Presentation of Offers”.
So that’s a mouthful. So you know the, the instructions on this form are the buyer’s agents allowed to be present, present during the offer presentation. And offers must be presented without delay. So the, the assumption is if there’s no form there, the buyer’s agent can present the offer in person and the buyers, the offer would be presented without delay. Once this form is in place, you can say the buyer agent doesn’t have to be there. Or shall not be there. And we will, if you send me an offer on Tuesday, I cannot share it with the sellers until next Monday, and there’s instances where this will benefit you and there’s instances where this will hurt you. As a Realtor it would be very uncomfortable for me to get a really good, ridiculous bully offer that I cannot share with my client because of this form. I’m acting in the best interests of my client. By sharing it with them I’d be teasing them and I would be saying that you cannot respond to this offer. That’s the movie I want to watch.
You know, the Real Estate Board, like any managing broker of a brokerage of any real estate contract, they recognize that the bad scenarios of this form can be pretty bad. You can be arguably working against your client’s best interests in scenarios where a really good offer, if a really good, if a subject free offer came in and you can present them, don’t want to let them know because they’re gonna want to take it and you can’t let them take it. That’s why this says multiple times “seek independent legal advice”.
I like that because that’s the way that we remove our liability. So the Real Estate Board removes its liability and “Seek independent legal advice” and the designation, it says here “The designated agent has informed the seller of the pros and cons and recommends them to seek independent legal advice”.
For anyone that sees “seek independent legal advice” that is the, the phrase that says you can’t sue me. Seek independent legal advice. This form must be posted on the MLS. It, it, it’s not to provide like, sorry, it’s in any circumstance, I mean, the short thing is, when you sign this form, if you say we’re not looking at offers for a period of time, you cannot backtrack on that it is public information. And in theory, it is encouraging Realtors to hide an offer from you because I don’t know how to have that conversation with a client if I say: “Here’s a great offer that you can’t take ‘til next Tuesday.”
Denny: Is this anything about when this form is to be signed? Because like the clear way around this is just to not sign it and see how the first few days go.
James: No, it doesn’t say that. So yeah,you’re right. There you go. Clear way around it. And I guess one thing to consider. If you don’t sign this form it is assumed that the buyer’s agent can be present and the offers must be presented without delay. Just recognize that that doesn’t always happen if you don’t sign the form. Don’t assume that the offer is gonna get presented the moment it gets sent in. There are so many cases where it takes a day or two to get this like, out of town sellers, busy sellers. It takes a day or two to get their heads around it. And there are many instances where a seller just may not want anyone present there for the offer presentation.
The form is to make it clear, I think the intent is good. I think that the intent is to minimize the criminal or sketchy things that some Realtors, a select few have done in the past. So I like their intent but boy is there some circumstances where this form could bite you in the ass.
Denny: Absolutely. Absolutely. Okay, so that’s the movie you want to watch. The movie that I want to watch is January 1, 2023 when the cooling off period comes into play. So we’re in a slow market right now. We’ve seen interest rates climb 3.75% in the last six months. A lot of listings are sitting on market, are not selling quickly. And now we have this cooling off period coming into play January 1 which says if an offer is subject free, the buyer has three days to back out without any liability for the contract, but they owe a .25% non refundable deposit to the seller.
So there are a number of ways around this and we haven’t really been given all the details so TBD on exactly what that’s gonna look like. But from my understanding this is applicable on subject free offers only. So what is stopping people that really want a property that are competing from writing a two-hour subject to financing, or things of that nature? But it is gonna be interesting to see this rollout. Having the .25% deposit non refundable, who’s collecting that? Who is that getting paid to the seller? Is that my responsibility to knock on the buyers door that just back down and be like “Hey, where’s your bag of money?”
It’s gonna be interesting. This is one of the strangest things. Yeah, it’s one of the more stranger policy things that I’ve seen come into real estate in my career. And really, we don’t have a lot of information nor do we know exactly how this is gonna look in January.
James: No. And I guess I just to add to that, like when a seller and a buyer sign a contract, it’s a firm and binding agreement. Does, I mean, to me regardless of this “Irrevocable Direction Regarding Presentation of Offers” to me if you broke that and said, I’m not looking to offers to next Tuesday, but saying I could very well see agents sharing a bully offer early regardless of the form. And if the seller says I’m signing it who’s, who’s going to enforce the “Irrevocable Direction Regarding Presentation of Offers” form?
I mean, I think there could be an absolute penalty for the Realtor from the council perspective. We will see. That’s the movie. There’s a few movies here Denny. So, good point. There’s a lot of contractual legal practices that, that remain true and the Real Estate Board is trying to implement new things. I don’t think it’s necessarily driven by the Board but they’re implementing things to make it bulletproof and dummy proof. And, yeah, I don’t know how that’s going to go down. Yeah. So this may not affect a lot of you in Winter, but it will when the market heats up again in Spring. And especially in a multiple offer environment. That’s when we’re going to really see this movie come into action.
Denny: Which is not going to be next January, February, March. Great timing.
James: Ok, that’s it for this one. Thank you!