Ontario real estate regulations to offer alternative to blind bidding
The Ontario government says new regulations that take effect next year will help to make the homebuying process more transparent, but critics disagree, saying the rules could add confusion and will do little to bring down inflated prices.
Ross Romano, Ontario minister of Government and Consumer Services, said on Tuesday the regulations would enable home sellers to disclose details of competing bids on their properties if they choose. He said the province wants to give sellers the option of what it calls an "open offer" process.
"Sellers will no longer be limited to selling their property through a closed or traditional offer system," Romano said in a statement on Tuesday.
Under the current system of blind bidding, potential homebuyers submit their offers but do not know the contents of competing bids. The law states that real estate brokerages who represent clients must disclose the number of written bids but not the substance of those bids.
Under the new regulations, sellers would have the option to open the bidding process and make all offers transparent. That means the brokerages who represent them would disclose details of competing bids at the discretion of sellers.
Lesli Gaynor, a real estate sales representative in Toronto, said blind bids should not be one of many choices, but should either be the only method or not allowed at all.
The idea is to create a level playing field, she said.
"I think in the context of today's real estate market and the way that it functions, nobody is going to choose to have an open bid process if there is still the option to have a blind bid process," she said.
Gaynor said the blind bidding process isn't solely responsible for Toronto's inflated real estate market, but it does create opportunities for agents and sellers to drive up prices.
"It provides a mechanism to increase the offers that are on your table, by blindly sending them back for improvement."
Gaynor said she would prefer to see a more uniform system implemented by the government and wonders if giving an option to sellers, such as this one, may cause more confusion. She said she wonders how the government's regulations will work.
"People are going to choose to stay with the blind bid because it can produce a higher selling price. Sellers can start bidding against themselves."
End blind bidding properly, Green Party says
Mike Schreiner, leader of the Green Party of Ontario, said blind bidding cannot be left at the discretion of the seller, and if the government wants to end blind bidding, it should do so properly.
"Home-sellers shouldn't be able to pick and choose when the bidding process is transparent and when it is blind. That defeats the purpose of ending blind bidding, since it's in sellers' best interest to keep buyers in the dark," Schreiner said in a statement on Tuesday.
"A consistently transparent bidding process will help bring down the skyrocketing price of houses, and along with other key policies like expanding zoning and investing in affordable rentals, will help us build an Ontario where everyone has an affordable place to call home."
Under the proposed regulations, which will implement Ontario's Trust in Real Estate Services Act, 2020, the province also plans to bring in a new code of ethics for real estate agents, standardized forms and more stringent disclosure obligations.
The regulations are set to take effect on April 1, 2023.