Blind bidding in the homebuying process has been called into question recently, with the prime minister of Canada even making an election promise to outlaw it—and drawing censure from two real estate organizations in the process—but one Toronto-based broker believes Canadians need more choice, including an alteration to the current process.
“Adding a layer of transparency to blind bidding is what we’re advocating for. Listing agents who work primarily for sellers obviously see the value in the closed system, because there are cases where people pay higher by not knowing what the prices are, but our idea is to have the offer process exactly the way it is today where buyers need to be registered and have to put an offer on paper, and once the seller has viewed all the offers, they could give all the parties a chance to improve their offers, walk away or leave their offers the same,” said Philip Kocev, broker and managing partner of Toronto-based iPro Realty Ltd. Brokerage.
He added that the best offers aren’t necessarily the ones with the highest dollar amount; rather, they could involve favourable closing dates, terms and conditions.
Ultimately, though, Kovec believes Canadians should be offered more, not fewer, choices.
“There should be choice to allow the current process of blind bidding, a modified transparency model, or the ability to have auctions, which [traditional brokerages] are precluded from doing today. Banning anything one way or the other is wrong policy.”
Two weeks ago, the Ontario Real Estate Association (OREA) excoriated Justin Trudeau’s pledge to prohibit blind bidding, which the prime minister reasoned would help decelerate rapidly rising home prices, by releasing a statement in which it accused him of criminalizing hardworking families.
“You cannot fix Canada’s housing crisis by denying millions of hardworking families the choice of how to sell their home and by pitting homeowners against buyers. In fact, this plan would have the opposite effect—negatively impacting Canada’s housing market and making homeownership even more unaffordable,” said the statement from David Oikle, OREA’s president. The real estate association also warned that an auction-style homebuying process would exacerbate unaffordability by driving prices up even higher than the current closed bids process is.
Even the Toronto Regional Real Estate Board jumped into the fray and charged that auctions would compromise consumers’ privacy.
“It is critical, however, that government actions be carefully considered to ensure that they aid in solving these challenges directly and do not create a host of additional challenges. Consumer choice and consumer privacy should be paramount in shaping government policy. Federal public policy should recognize the right that consumers have to privacy, and should allow them to consent to the disclosure of personal information, instead of penalizing homebuyers and sellers. Punishing homebuyers and sellers for wanting to keep their financial decisions private for the largest transaction of their lives is a substantial overreach of the government,” said a statement from Kevin Crigger, the real estate board’s president.
However, Kocev believes all three players have taken wrongheaded approaches, accusing OREA of engaging in fear mongering and TRREB of incorrectly asserting that privacy could be jeopardized, while he thinks the Liberals’ election pledge is myopic and hasty.
“At the end of the day, transparency brings fairness and greater credibility to the offer process,” he said. “You’re going to see situations where someone may not grossly overpay for something because they know what those other bids are, but you will see situations where a buyer is comfortable bidding higher. I think you’re going to see both sides of those situations, but to say all of a sudden that having open transparency will be this chaotic process where people overpay grossly isn’t true.”