A small rule change has lead to big changes for buying and selling real estate in Alberta. The new rule requires that REALTORS® report pending sales to their Association's MLS® system database unless the sellers complete a form instructing their agent not to report the pending sale. When a property is reported pending, it will not appear on property search sites like REALTOR.ca and EdmontonRealEstate.pro, effectively taking it off the market. Pending sales were previously handled differently by different associations across the province, and now all REALTORS® will follow the same rule in Alberta.
What is a pending sale?
A pending or conditional sale occurs when the seller has accepted an offer on their property, but there are conditions that haven't been removed (the most common conditions are financing and inspection conditions). If the conditions are removed, the home is reported sold, if they are not removed the property goes back on the market.
Why would you report your property pending?
If you're confident the conditions will be removed, and you no longer want to have showings, you may want to report the pending sale. If you have a backup offer in place you may also want to report your sale pending; a backup offer is an offer from a second buyer, that only comes into effect if the first buyer doesn't remove their conditions. Backup offers often motivate the first buyers to remove conditions, also, a buyer willing to be in a backup offer position is often very motivated to purchase the property, so it's very uncommon for a property with a backup offer to go back on the market.
Why would an agent recommend you report a pending sale?
There are main three reasons an agent may recommend that you report a pending sale:
- They're confident the deal will go together (see points above).
- If the agent starts to sense the pending deal is not going to go together, they may recommend that you report the pending sale, so you can re-activate the listing when conditions are not removed, and trigger an email to all the buyers with saved searches. This gets extra exposure for the listing and alerts interested buyers and their agents that it is back on the market.
- Since reporting the listing as pending removes it from web searches and effectively takes the home off the market, the agent may be hoping buyers will contact them directly about the property.
When should you not report a pending sale?
I would not recommend reporting the pending sale unless you have a backup offer. Reporting the pending sale effectively takes your home off the market since it is removed from property search sites while it is pending. If you're trying to limit showings, you can instruct your agent to inform buyers that you're pending, and direct buyers to view the virtual tour (assuming you have one), but if they buyers still want to view it, you have to allow the showing or mark it pending (active listings must be available for showing within 24 hours notice). Your agent can (and should) collect the names of any agents and buyers that inquired about the property while it was pending, so they can inform the interested parties if the deal doesn't go together, and hopefully set up a number of showings in a short period of time. Who knows? Maybe you'll get multiple offers!
Does "Subject to Sale" count as a pending sale?
If your pending offer is subject to the sale of another property (ie the buyer's need to sell their home before they can move forward to purchase your home) it is considered pending, but I would not recommend disclosing the pending sale. "Subject to sale" deals often don't go together, and when they do they typically take months to remove conditions; if the buyer knows you're still actively marketing the property they will be more motivated to get their home sold, and you will be more likely to get another offer and get your home sold one way or another.
Does your agent have to disclose pending sales when asked?
The short answer is: Yes. The long answer is that there are a number of ways your agent can disclose the pending sale if you decide not to report it, in which case you will have the following options (as of the writing of this post):
"I/we instruct the brokerage to:
- disclose the existence of the conditional offer if specifically asked
- disclose the existence of the conditional offer when a showing is requested
- disclose the existence of the conditional offer in the REALTOR® Remarks on the Board’s MLS® System
- not disclose the existence of the conditional offer
I acknowledge the legal obligation of the brokerage to be truthful, therefore, the Brokerage will respond to status inquiries with “The Seller has instructed me not to answer that question”."
The option you select will depend on whether or not you're hoping to have showings while your listing is pending. If you instruct your agent "not to disclose the existence of conditional offer" and they are specifically asked if the listing is pending or if there are any offers on the listing, they will have to respond "the seller has instructed me not to answer that question" which we all know means that the listing is pending. Note that asking if the listing is "available" is not the same as asking if there are any offers on the property, in which case the listing agent could respond "yes," if the home is pending and available for showings.
Should buyers view pending listings?
There is a higher than the normal failure rate of pending sales currently, so viewing pending listings could be to your benefit if a deal on a property collapses because you could be in a position to move on it. Otherwise, you might have to get in the cue of buyers that want to see the property while someone else is writing an offer. You may even decide to write a backup offer while the property is still pending, essentially blocking other interested buyers from competing with you if it comes back on the market. However, it is very disappointing to go through the process of negotiating an offer, only to lose out because the first buyers removed their conditions (your backup offer may even motivate them to remove conditions). Only you can decide if you want to view listings with pending offers.
What if you don't want to view pending listings?
That's simple: inform your agent that you don't want to view pending listings. Most buyer's agents will let you know that a listing is pending before they show you the home so you'll have the chance to decide whether or not you want to see it. What you shouldn't do is ask agents if the property is available, since a pending property may be available for showings. The best person to talk about pending properties and other aspects of buying and selling real estate is your real estate agent. It's amazing how one small rule can impact so many aspects of buying a selling real estate. A trusted advisor can help you navigate the ins and outs of buying and selling; we'd love to help you buy or sell your home, so if you're currently not under contract we'd love to have a conversation with you on how we can help you get what you want out of the current real estate market.Posted by Liv Real Estate on