The Ontario Real Estate Association (OREA) is urging its realtors to push back against any attempts to make the disclosure of competing home offers in bidding wars mandatory.
The province has been flirting with the idea as it completes its review of the Real Estate Business Brokers Act, 2002 (REBBA).
OREA represents some 78,000 members. It reached out to them this week via email and told them to contact their MPPs and express their opposition to the mandating of this practice.
“The government should not force consumers to gamble their life savings in an experimental, mandated open offer process,” said an OREA email signed by association president Karen Cox, according to the Toronto Star.
“Buyers and sellers should have the choice of using an open, transparent process.”
Bidding wars — where there are multiple offers made on a home but their details are kept secret from all potential buyers — have come under harsh scrutiny recently, with Ontario looking at doing away with them altogether as part of its plan to update the REBBA.
OREA actually appeared to be on board with this back in February, when the association’s CEO, Tim Hudak, told the CBC that, “It's time for the legislation, as well as enforcement and education to catch up with the modern real estate market. Updating the rules will increase professionalism in our industry, which is what realtors want and what home buyers and sellers deserve.”
OREA’s staunch opposition to compulsory sharing of competing home offers is somewhat of a walkback from its initial call for an open bidding process that would effectively eliminate the stressful process of bidding wars. Bidding wars are a brutal rite of real estate passage in Toronto that typically result in potential buyers submitting blind bids — often for far more money than they initially intended to offer — as a means to beat out the competition.
The OREA’s concern lies in buyers being put in a position where they end up oversharing.
Everything from the buyers’ addresses to how much cash they have ready to put down to whether or not they need to sell another home in order to buy this one would be included in the offer documents, which realtors would then be obligated to distribute amongst potential buyers as well as the seller.
“This would invoke a brand new process for every real estate transaction where brokers would have to distribute offers to all the other buyers,” Hudak told the Star, saying it “would be a radical change in the real estate market that does not exist anywhere else in North America.”
Open bidding exists in some U.S. states as well as in Australia. In fact, in Australia, homebuyers stand out front of the house and submit their offers in an open auction format. Australians also have more consumer protections than Canadians when it comes to real estate. They’re able to access information about the house online, like how much it sold for in the past, as well as see past home inspections.
As part of a list of 28 recommendations to improve the REBBA, the OREA says home sellers should be given the “option of an open offer process” rather than it being mandated.
The recommendations also included putting a ban on bully offers, which is when a seller submits an offer prior to the official offer date. Bully bidders will often bid much higher than the asking price in an attempt to get the seller to sell to them before formally reviewing other offers.
For some realtors, their opinion on an open offer process depends on who it is they’re representing.
“If I were representing my seller I’d say, ‘no,’” Royal LePage’s Desmond Brown told the Star. “Unless I was mandated to do it, I wouldn’t do it. It’s our job to protect our clients.
If I had a buyer I would want to know as much information as possible.”