Lift veils off home-buying
Buying a home is the most significant purchase most people will ever make.
But until now would-be purchasers have had to do it with a blindfold on, since realtors are not allowed to share the details of an offer with anyone other than the seller. That means home buyers have to guess at what the winning bid might be before submitting their own offer.
Now the Ontario Real Estate Association (OREA) is recommending that the province adopt a new open process that would allow buyers to know how much others are bidding on a home and what conditions are in their offers.
This is a sensible idea the Ford government should enact when it updates the 2002 Real Estate and Business Brokers Act that governs how real estate is transacted in this province. And it can’t move quickly enough on that file.
After all, the blind process has been blamed for driving up home prices in the over-heated Toronto-area market in 2016 and early 2017, when it was common for a property to attract dozens of offers.
That’s good for sellers but it makes the city more unaffordable, encouraging people to flee to the suburbs. And that has all sorts of negative effects, from increasing the amount of time people are stuck commuting in traffic, to putting pressure on governments to build more highways, to losing farmland and green spaces, to suburban sprawl.
Importantly, too, an open bidding process will bring much-needed transparency and fairness to the market.
Under the current system, for example, some people lose out on buying a home because they bid a few thousand dollars under the winning offer — something they might have changed if they had known the details of competitive submissions. In this case an open process would be good for sellers and buyers alike.
At the other end of the scale, it is not uncommon for some winning bids in Toronto to be well over $150,000 more than the second-highest bid because the buyers don’t know the extent of the competition they are up against. While that’s good for sellers, it isn’t good for buyers or the city’s affordability index.
An open process also allows people to take the time they need to weigh their decisions and decide whether they are going to improve their offer, says OREA CEO Tim Hudak. It takes the “circus” out of the process, he says.
This proposal would also reinforce a trend toward transparency in the housing market demanded by consumers and the Competition Tribunal.
Indeed, that bid for transparency was bolstered last August by no less than the Supreme Court of Canada. It ruled that the Toronto Real Estate Board (TREB) could not prevent webbased brokerages from publishing “sold data” on their websites.
TREB’s seven-year battle before the Competition Tribunal and the courts to try to prevent that data from being posted online was seen as a protectionist strategy that forced consumers to use realtors to get that information, rather than other sources.
But it had the effect of making it difficult for purchasers to easily access information that would help them make make informed decisions about the house they want to purchase and the neighbourhood they want to buy in.
Now online brokerages are looking at other ways of making the entire buying process more transparent for consumers, such as offering sales histories to their clients online, as well as commission rates, previous listings of the same property and transactions that haven’t closed. That’s all for the better. For too long home purchasers have been kept in the dark by a closed-bidding process that made buying their dream purchase an angst-filled ordeal. It’s past time the curtains were lifted on the whole murky process. The sooner the better.
It’s time information on bids for a house was shared among all would-be buyers
It’s time the veil of secrecy was lifted from the bidding process on home buying.