Blind bidding has been under scrutiny for years. It’s one of those things that makes our sellers sing, and our buyers cry. Many argue it’s the culprit behind rising Toronto area real estate prices, while others feel it’s a sellers’ right to make the most from their sale. With the Ontario government’s change to the current blind bidding process, sellers might worry buyers will finally find themselves in the drivers’ seat. Here we look at what the change to blind bidding really means to Toronto homeowners and if it threatens your prospects for wealth building.
What is Blind Bidding?
Blind bidding is the process used for multiple offers. The current law allows a seller to accept multiple offers from buyers without disclosing what each bidder is offering. The process makes it difficult for buyers to know where to come in with their offers, which pushes offer prices up. This is why some believe blind bidding is a major factor in the inflated housing prices we are experiencing in Toronto. However, blind bidding was designed to actually control overpricing. When competing bidders know how much everyone is offering, they will top the highest bidder to come out ahead. Either way, bidding wars always see prices coming in over asking when inventory is tight.
2022 Ontario Government Changes to Blind Bidding
The Ontario government is not making a major change. They’re simply giving Toronto property sellers the option to disclose information of competing offers. So really the change doesn’t impact buyers or sellers. The government’s goal is to allow sellers to take offers on their own terms, allowing them to opt in to disclose other offers or stick with the blind bidding scenario.
Federal vs Provincial
The Ontario government’s move is likely to cause confusion for home buyers who might think the federal government’s plans to completely ban blind bidding is still on the table. However, the federal government does not have the right to ban the practice in Ontario, as real estate laws are governed by the province. So, the change is here to stay, at least for now.
Trust in Real Estate Services Act
The blind bidding change is part of a new Ontario code of ethics for real estate agents. The Trust in Real Estate Services Act is designed to provide consumer protections and provisions to improve consumer choice. It also protects consumers against bad real estate agents out there who don’t act in the best interest of their clients. (You can read more about how to spot the bad eggs here.) According to the Ontario Real Estate Association (OREA) the change to blind bidding in the act helps “strike the right balance” for home sellers. They now have choices.
Toronto Homeowners Wealth Building
Sellers having an option to disclose bids still leaves them holding all the cards in the blind bidding process. So, the good news for our property-owning friends is that the change will have zero impact on your ability to build wealth. You can also discuss the whole opting in option with your real estate agent to see whether it can help you get the best price for your home.
Buyers Left Out
Meanwhile buyers are no worse off than they were before. While OREA says most of their members oppose a blind-bidding ban, The Toronto Regional Real Estate Board (TRREB) believes there has to be a balance between buyers’ and sellers’ rights. In short, buyers will continue to depend on the advice of a good Toronto realtor to guide them through a blind bidding scenario. The trick to blind bidding is to ensure you don’t pay far too much for a home and miss out on the opportunity to effectively build equity.
If you’re looking for a team of Toronto realtors to help build equity fast, the Christine Cowern Team’s got you covered. Give us a call at 416.291.7372 or email us at firstname.lastname@example.org. We’d love to work with you!