Open bidding was introduced in Ontario at the beginning of December as part of the latest update to Ontario’s realtor legislation, the Trust in Real Estate Services Act. The legislation gives sellers the option to disclose submitted bid prices to potential buyers, an important caveat (i.e. the option) to this plan to ensure fairness among both buyers and sellers.
This has been a hot topic since the spring of 2022 when the Liberals proposed to create a national bill, A Home Buyer’s Bill of Rights, that would “make the process of buying a home more open, transparent and fair,” according to a statement from the government. The bill also included a national plan to end “blind bidding,” a process that has frustrated buyers and has often been blamed for driving up home prices across the country.
Mixed sentiments and past experience
The move in Ontario has been positively received by some governments and real estate professionals who maintained that doing this could curb artificially inflated selling prices and address Canada’s housing affordability challenges.
However, Canada’s housing affordability crisis didn’t start — and it won’t end — with blind bidding.
For several years now, Re/Max has been advocating for greater transparency in the home-buying process. While this is a step in the right direction, the reality is, Canada’s housing affordability crisis is rooted in a severe lack of housing supply in every community, city and neighbourhood across the country.
In taking learnings from other countries such as Australia, Sweden and New Zealand, which have all implemented similar policies around blind bidding, we know that price inflation has continued.
So, what’s the solution?
We need a coherent and achievable national housing strategy that addresses the lack of supply and improves affordability for more Canadians. To do this, collaboration between our federal, provincial and municipal governments is the key.
However, it’s not enough to just build more homes. We need to build more diverse housing to fill the “missing middle,” with municipal zoning laws that support this.
We need to expand capacity for laneway developments and the like.
We need to be more strategic and visionary in how we can use existing lands and real estate to drive our housing supply.
Ultimately, if we compromise wetlands, grasslands and reservoirs, then we potentially make new-home developments and existing communities susceptible to extreme weather events, which is likely to drive up the cost of insurance for all homeowners.
The strategy also needs to see to it that new housing development projects are getting approved and built much faster, by cutting the red tape, and through immigration policy that considers Canada’s labour shortage, including skilled trades.
We need to look at all options to offset the pending shortfall. And the vast majority of Canadians agree.
According to a recent Leger survey commissioned by Re/Max, 72 per cent of Canadians believe that as municipal, provincial and federal governments make plans to increase housing supply, it’s important that they also consider the diversity of new housing that’s being developed.
Transparency: Important but no remedy for piecemeal solutions
Transparency in the market will always be a good thing, but we need to differentiate between positive measures to increase fairness in the market, and piecemeal solutions that skirt around the core problem: Canada’s lack of housing supply.
It’s important that Canadians see the end of blind bidding for what it is: a more transparent home-buying and selling process, not a market-cooling measure. For the long-term health of the market, we must protect it now, and for years to come.
Christopher began his career as a Re/Max Sales Associate at an independently owned and operated brokerage in 2010 before joining sub-master franchise Re/Max Integra as a Franchise Sales Consultant in 2014. He then served as chief strategy officer and executive vice president of Re/Max Integra and was responsible for the day-to-day operations as well as developing and overseeing business strategies. He joined Re/Max, LLC as Senior Vice President of Re/Max Canada in July 2021 and was named president in November 2021. Christopher Alexander oversees operations for the company-owned Re/Max Canada region, which includes Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island and Saskatchewan. Additionally, he works closely with the leaders of the independent RE/MAX Quebec region to build a cohesive brand strategy across the country.
I mean “really” – what Seller is going to go with “Open Bidding” and lessen their return on their largest possession. In many cases, their home is their nest egg and they want and need whatever the market will pay for their home. I think it best to “but out” and let the free market decide. Supply and demand! So Government……increase the supply.
From what I have seen the Openn digital property transaction platform is marketed in AU towards brokerages and sellers as a means to attract more buyers and push pricing up. The messaging pivots to increasing transparency in Canada but I don’t see why we should expect the results to differ here?
Blind Bidding needs to STOPPED through government legislation. Agents who hold bidding wars and tell buyers agents “we have some very competitive offers does your buyer want to up their bid” when no higher/competitive bid exists should be fined and face jail time for FRAUD. This illegal unethical behaviour has driven home prices up unnecessarily. I would report them to The Boards but the Boards don’t want to discipline this corrupt behaviour. BC leads in consumer protection, team listings exclude all members from selling the team listing. Ontario needs to follow and rid the industry of the bull shit liars.
This whole initiative is in place because the “powers to be” believe this will be how the real estate market will be all the time? When the market “changes” and sellers are begging for buyers to write offers where will these “real estate do gooder law makers be”, who will support the sellers losing their equity? Certainly not the politicians. There will be no “protect the sellers equity act” to protect the sellers from those greedy buyers…
This is a fools gambit.
No Seller is going to go with “Open Bidding” They will go with whatever process brings the best and highest price for their home as they have every right to do.
All Buyers typically become Sellers and you won’t hear that disgruntled Buyer complaining then!
Through REM Magazine to Mr Alexander,
Dear Chris,
As you have done with this article on Optional/Open bidding, please present a similar expose of the fallacy of the “Affordability is a function of Supply” mantra.
Affordability is a stress-triangle of Household Incomes vs Interest Rates vs Prices.
PRICES
No one expects new-home builders to develop and/or sell-at-less-than the Highest & Best Use of a given parcel.
No one expects an Owner-Occupier Seller nor an Investor Seller to sell-at-less-than the highest available price for their residence/asset.
INTEREST RATES
No one expects Lenders to offer a less-than-the Current-Rate of Interest Mortgage to buyers of a “certain class/group” of home buyers.
No one expects a “certain class/group” of home buyers be granted Discounted /Subsidized Mortgage Rates courtesy of Government.
HOUSEHOLD INCOMES
No one expects Employers /Governments to immediately boost Household Incomes by 40%-80% across the board.
No one expects short-term Canadian Productivity to increase by 40%-80%, thereby creating a REASON for Household Incomes to rise commensurately.
PROGRESS on SUPPLY-SIDE Solutions
So far, Government subsidization of purpose-built rentals’ interest-costs and/or their time-awaiting-approvals costs as well as curtailing/reducing municipal Development Charges and unilateral, broad-brush imposition of Increases in Density (far beyond the local Official Plans) is the complete extent of the Supply-side Action on Affordability.
I agree that more purpose-built rental projects WILL BE completed in the next 3-10 years.
But I doubt that ANY of these projects will offer units/homes that will cost-less to create and/or cost-less in monthly rent (unless additionally subsidized).
WHAT ABOUT DEMAND
Increases in demand push up prices.
Increases in inflation (/Devalued Purchasing Power) push up demand for Tangible Assets -but you cannot live in a bar of Gold or Silver)
Increases in population increases demand from the bottom up (via rental demand for people with little money) and in Quality homes, in Quality neighborhoods that are in Quality condition (people with money select as much Quality as possible)
Increases in population at a time of Low-low interest rates AND Low-low CPI inflation cause extra-ordinary INVESTMENT demand for Big Ticket Assets that can be bought with 20% cash and a low-low rate mortgage for 80% and then rented.
Increases in Prices are the result and those same Increases reinforce and perpetuate the Investment Demand cycle.
Until Interest Rates were extraordinarily increased (from 0.25%-5.25%) to curtail the Demand/Price cycle that the Low-low rates of the immediate prior era initiated and exacerbated
So let’s take breather from solely focussing on the Supply-side and equally address the Demand-side for the next 5-15 years.
We do not need a demand-push from 500,000 newcomers per year – especially in years when we are 30 years behind schedule in Supply.
The open bid options will do nothing to impact home prices. Maybe reducing flow of newcomers along with increasing supply to meet the current & backlogged housing needs (in record time none the less) could be a focus that may produce some actual tangilble results.
It is so sad to have such a serious homeless issue. We are not caring for our citizens. Then we bring in new citizens who are sleeping on the ground outside the shelters along with the rest of our homeless.
Yet the disaster is still unfolding.
We need real solutions. The government has created a disaster, and we the people bear the weight of it.
Is REMAX behind Openn.ca ???
I have been in a situation where the realtor said there is another offer on the table so you better put YOUR BEST offer forward. We didn’t feel right with this tactic and pulled our offer. The market was ballanced(2014 sunshine coast,BC) and lots of other houses. Right now in Calgary there is low invenetory and we are seeing 10 offers come in forcing a very strong offer, usually omitting the inspection.
To increase transparency, one of the best ways is having a PRE-SALE inspection done. A quote from one of my favorite REALTORS. “Do you want to have the can of worms open now or later?” “Now” saves so much time and illiminates the 11th hour negotiations.”Later” In areas where home inspections are being waved the buyer is moving in blind and possibly finding 10s of thousands of repairs needed.