The blind bidding war has been a fixture of Canadian real estate for a generation, but even with new rules in Canada’s largest real estate market that will allow realtors to part the veil of secrecy, industry experts don’t believe an era of open auctions is upon us.
On Dec. 1, the latest update to Ontario’s realtor legislation, the Trust in Real Estate Services Act (TRESA), came into force, allowing sellers for the first time to direct their agents to share details of buyer bids with other buyers.
Blind bidding is a hot topic when the market is soaring, and the practice was mentioned in the April 2022, federal budget when the governing Liberals promised to create a “Home Buyers’ Bill of Rights” that would ban the practice nationwide. Almost two years later there’s no sign of a ban and Ontario’s new rules only open bidding voluntary.
There’s little public data on how often bidding wars happen. For example, the country’s largest association – the Toronto Regional Real Estate Board – doesn’t collect the information and doesn’t make bidding wars a searchable category for online brokerages. What can be tracked is how often properties sell “over asking,” which, while imprecise, does offer signs that a property was bid up.
“I think it’s actually going to be worse,” said John Pasalis, president and broker of record with Realosophy Realty Inc. “If this was a pure open offer system, where it is transparent, that’s completely different. That is not what this is. This is the Wild West. It’s worse for the buyer and probably better for the seller; the seller has more tools at their disposal to maximize sale price.”
New homebuyers have often been frustrated at the unfairness of the bidding war system as it was previously constituted, where sellers could host an offer night and receive multiple bids, but the only information allowed to be passed on to other bidders was the number of other offers. Blind bidding could extend into multiple rounds and buyers sometimes raised their bids even if they were already in the lead. At the end of the day people want more transparency – this is opening the door to that.
Reform of blind bidding was sometimes pitched as an affordability measure; though because of a lack of data collection around secret bids, it’s never been clear how much the practice might have increased prices. The Ontario government continues to promote approaches that encourage consumer choice in the real estate trade process.
Industry veterans also warn that the new rules leave a lot up to the seller, and there will likely be as many ways to run an open or closed bidding war as there are realtors in the province.
The new rules don’t provide a road map to how an open offer day would differ from a closed one, and the different approaches realtors have used for purely closed bidding wars can already make the practice chaotic.
As for the federal promise of open bidding, Housing Minister spokesperson Micaal Ahmed said that since real estate generally falls under provincial and territorial jurisdictions, the federal government continues to consult with stakeholders to make a home buyers’ bill of rights.
The work is well underway and nearing completion, he said.