We’ve come close to winning a few multiple offers but haven’t been able to buy a house yet. I hate that we don’t know what other buyers are offering. How are we supposed to aim at a target we can’t see? – FLYING BLIND
DEAR FLYING: As frustrating as it is, Ontario’s “blind bidding” legislation requires that details of multiple offers be kept secret from everyone but the seller and their Realtor. In a bidding war, the listing agent is required to disclose how many offers they’ve received, but they are not allowed to share the details of those offers. Even other agents won’t know what a home sold for until the deal is firm.
Our legislated lack of transparency forces buyers and their agents to guess at what other buyers are willing to pay. A buyer takes a gamble when they submit a strong offer, since they want to win the deal, but also avoid paying more than necessary. At the end of the day, a successful buyer has no idea whether they won by a hair or a mile, and the unsuccessful buyer is left in the dark about whether they took second, or possibly sixth place.
The bidding process is a hot topic in real estate circles these days, and lately there has been discussion about modifying our system to make it more transparent.
Ontario Real Estate Association (OREA) CEO Tim Hudak is advocating for a dual bidding approach that would allow sellers to choose between either blind or open-auction bidding when they list their home for sale on the MLS system. Should a bidding war arise, the open-auction option would allow potential buyers to see the details of offers they are competing against. Blind bidding would not allow for this, but a buyer who wishes to avoid blind bidding could simply bypass properties that require it.
Over time, a dual bidding system may encourage sellers to be more transparent, while also providing buyers with a bit more power. If sellers find that blind bidding has a negative impact on showing traffic, the number of offers they receive or their selling price, the practice may fall out of favour on its own, which could reduce the number of times buyers offer tens of thousands of dollars more than the next best offer without ever knowing the difference. Realtors would lay out the advantages and disadvantages of both approaches for their clients.
PRO TIP: Open bidding is being discussed, but no details have been hammered out yet. I’m hoping that upcoming legislation will work towards a greater degree of transparency, since the number one complaint I get from buyers is that they don’t know the details of offers they’re competing against. #AskDavid #Advice
David is obsessed with client success and helping people get the most from their largest investment. Moving? Get it right. Ask David. Call or text 519-577-1212.