The Ontario government recently announced that it is proposing new regulations that allow home buyers to see all competing offer prices if the seller agrees to their disclosure.
According to Minister of Government and Consumer Services Ross Romano, “sellers will no longer be limited to selling their property through a closed traditional offer system.” Instead, sellers will get to choose if they want to “opt for an open offer process” and share bids. If passed, the new changes would take effect on April 1, 2023.
Eliminating the blind bidding process with sellers’ consent
Bling bidding is a practice where buyers bid for a house without knowing the size of competing offers. While real estate agents must share the number of bids under current regulations, they are prohibited from sharing the value of those competing offers. Opponents of the blind bidding process submit that it has significantly contributed to soaring house prices and an overinflated housing market.
If amendments to the process come into force, agents will now be permitted to share any information about opposing bids that the seller chooses to share with their clients. Sellers may share any information they want, including the price offered, closing date, financing, or other conditions.
While it is hoped that this measure will help correct housing prices by bringing more transparency to the purchasing process, it remains to be seen just how many sellers will elect to share information and what information exactly they will share. Therefore, it is still unknown if these changes will be largely theoretical but not used in practice.
Given this unknown, some people have been critical of these proposed changes, feeling they don’t go far enough to address issues with the housing market. While greater transparency in the bidding process is a good thing, Mike Schreiner, leader of the Green Party, noted that sellers would likely continue to withhold all information if given a choice to elect disclosure or not:
“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.”
Others also criticized the optional nature of the disclosure, such as mortgage expert Sung Lee:
“Making (bid disclosure) optional for sellers doesn’t make sense. Blind bidding benefits sellers, not buyers. If the goal is to create transparency, this should be mandatory.”
Some realtors and housing experts have criticized the move toward changing the blind bidding process, arguing that it will be ineffective in reducing housing prices and that sellers should get to decide how they want to sell their homes.
Amendments to bidding process are part of a greater package of reforms
The changes to the blind bidding process are part of a package of reforms developed in conjunction with the Ontario Real Estate Association (“OREA”), Canada’s largest provincial real estate industry association representing 92,000 realtors. According to OREA’s Chief Executive Officer, Tim Hudak, these changes:
“…strike the right balance between adding more transparency to the offer process and protecting a homeowner’s right to sell their home how they want, instead of blanket bans on the traditional offer process.”
The package of reforms also includes measures that would give regulators at the Real Estate Council of Ontario (RECO) new powers to go after “bad actors” by widening their jurisdiction to encompass the entirety of the provincial government’s Trust in Real Estate Services Act. It is believed that by giving RECO these powers, the process needed to resolve these issues will be streamlined so that they can be more efficiently and effectively resolved while “ensuring real consequences for those acting in bad faith.”
As Tim Hudak further stated:
“These changes will give RECO extra powers to throw the book at agents who are violating consumer trust. Tougher disciplinary measures will go a long way in ensuring that the realtors by your side during one of the most critical decisions of your life have the highest professional standards.”
Federal push to change blind bidding process
The Ontario government’s announcement follows the Federal government, which included a plan to ban blind bidding nationwide in its 2022 federal budget. Many different levels of government have continued to push for such amendments.
In Ontario, the provincial government writes the rules that all real estate salespeople, brokers, and brokerages must follow. RECO then enforces these rules on the government’s behalf. Part of those rules includes a Code of Ethics under the Real Estate and Business Broker Act, 2002, that sets out, among other things: obligations for registrants, procedures of the discipline and appeals committee. These obligations include, for example, section 3, which requires all registrants to treat everyone they deal with in the course of a trade in real estate fairly, honestly and with integrity.
The government seeks to introduce a new Code of Ethics for real estate agents, standardized real estate forms, and stricter requirements for agents to disclose when a buyer and seller use the same brokerage.
Oakville Lawyers Helping Clients with their Residential Real Estate Needs
Our real estate team here at Campbells LLP will continue to monitor changes to the blind bidding process and advise how they may impact the purchase or sale of your home. Here, at Campbells LLP, our experienced team of residential real estate lawyers is to answer any questions you may have about the current bidding process and the proposed amendments and assist in all manner of residential real estate matters, including the purchase and sale of your home. To speak with a lawyer about your real estate needs, please contact us online or call 905-828-2247 to schedule a consultation.