The recent Liberal election promise to ban blind bidding was an appeal to Canadians frustrated with increasingly unaffordable home prices and angered by a lack of buyer-side transparency. At a time when most buyers were forced to enter bidding wars, in many cases multiple times before winning with a well-over-asking price offer, a federal election with the possibility of a majority was in the balance.
The list of what governments (federal, provincial and local) can and should do is long and complex. By G7 standards, Canada is a million homes shy of what we need for our growing population. Removing red tape, adding density and solving NIMBYism are key to getting more housing. Adequate infrastructure investments of more public services, roads, parks, schools, firehouses and community centres are all fraught with bureaucratic hurdles. Growing the number of homes in Canada will be hard.
Open bidding won’t help to lower prices; only more housing inventory will do that. A recent Smart Property Institute study of countries that mandate open bidding found that home prices have escalated even faster than in Canada in recent years. As for more transparency, we’ve had truly open bidding for a long time, in the form of residential auctions. While totally transparent, these are rarely used because most buyers and sellers are loathe to participate in an open auction process for their most important investment. Open bidding, especially during today’s frothy seller’s market, could provide many similarly frantic situations.
Limiting transactions to only open bidding would also take away the seller’s right to choose how they sell their home. Blind bidding has worked well in Canada for decades but current disclosure laws on the offer process (which vary per province) provide very little buyer side transparency. Buyers are left in the dark and even after the deal is done, they are left wondering, What should we have offered? If a buyer wins the bidding contest they ask, was our bid too high? If they lose, they ask, should we have dropped this condition or gone $10,000 higher? And why did we lose out on that home we wanted so much?
If we are to maintain closed bidding as the primary option for home sellers, we as an industry need to argue for more accountability and clear post-transaction transparency that would give buyers more confidence in the process and add a layer of trust that isn’t there today.
What post transaction transparency could look like: after a sale is finalized, all the buyers who bid on or saw the home and considered putting in an offer could, through their agent, get a simple report that shows what the offers were. They would see “Offer A” (buyer’s name and information not showing) with the price offered, the conditions and closing date asked for, time stamped for when it was written and when it was presented. If there was a counteroffer, the details of that would go on the line below, noted as “Offer B” with the same information.
The technology is available to do this today with transaction management platforms that could be mandated, and reports built to offer this accountability. The Toronto Regional Real Estate Board’s planned blockchain could take past transaction transparency to an even greater level.
If our industry argues for more accountability and transparency, would it help to justify keeping blind bidding as an option for sellers – and help provide the buyers with a better experience at the same time?
Todd Shyiak is vice president, national network development, Century 21 Canada, where he oversees operations including the selection and servicing of all technology and training, leads national recruiting and retention initiatives and actively pursues M&A opportunities for C21 brokers. He has been in the real estate industry for decades. As an agent, Todd sold over 850 homes and condos. He has managed and mentored many agents, sold MLS systems into dozens of boards across Canada and the U.S., consulted and created broker technology and tools and ran his own agent recruiting company.
