Bidding wars can make the resale housing market a scary place. But the only reason a bidding war can be scary is because you have to go into it blind. That may change soon.
The Province recently launched a consultation, which is open to public feedback until March 15, that will look at a few changes to the Real Estate and Business Brokers Act. One area in particular that is being targeted is how bidding wars are managed.
Currently, if there are multiple bids on a home, the seller’s broker can only share the number of other offers. That’s not really helpful information. If there are many offers and you’re interested in submitting one, you’ll feel like you need to bid extra high or do something crazy like have zero conditions.
“The rules governing Realtors were set 16 years ago, when smart phones weren’t invented and fax machines were the norm,” says Tim Hudak, CEO for the Ontario Real Estate Association. “The industry has changed tremendously since then. 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 homebuyers and sellers deserve.”
There are a couple things that happen with bidding wars the way that they are right now: buyers may bid too high and go over budget in an effort to win the home, or they will be intimidated and back away because they don’t feel confident enough. This is a shame because there have probably been times when a buyer could easily beat the other offers but walked away from a dream home because they wanted to avoid a bidding war.
There are a few details up for discussion. Like, should the sharing of offer prices and details be standard or require the consent of everyone involved? Should there be an option for buyers to opt out of having their offer details shared? Should the offer details only be available to others submitting or should it be available to people considering making an offer? There’s also the idea of banning offers that automatically increase if a higher offer is submitted.
We live and breathe the new home construction market, so bidding wars are not a concern. When you buy a new home directly from a builder, you can see the price right in front of you and you don’t have to worry about someone out-bidding you. Of course, when the market is hot, you may have to stand in a long line to get into a sales centre, but it’s worth it!
“OREA has advocated for a review of REBBA for two years and we are thrilled the Government has listened to our advice,” says Hudak. “I want to thank Minister Bill Walker for his leadership in getting this important review underway. The review is focusing on modern business tools like personal real estate corporations to help Realtors advocate for their clients and build stronger communities.”
In our eyes, transparency is always best, especially when it comes to making the largest purchase you’ve ever made. Even in live and silent auctions, you know what the highest bid is. Buying a home should be a comfortable and happy experience, not a stressful mystery.