We need to change the bidding war process in Toronto! If you’ve tried to buy a home in recent years, you know how backwards the current process is…If you haven’t, let me explain.
The Current System
A seller will list their property below market values to create a frenzy amongst buyers. After roughly 7 days of market exposure, they’ll review and all offers that come to the table. The problem is that each buyer is going in “blind” not knowing anything about the other offers.
Current rules, as set by the Real Estate and Business Broker Act, say we can not disclose the motivation, offer, or price of a competing offer. Thus creating a blind bidding system full of suspicion and mistrust.
The winning buyer always feels like they paid too much, the losing buyers feel like they could have paid a bit more and the sellers could regret the highest bid if the winning buyer can’t secure the financing. Plus it artificially increases values as going in blind can create an over inflated offer.
How We Can Fix It
Simple – get rid of the blind bid system and open up the process. Let each party know the Price, Deposit and Closing date of the other offers. This levels the playing field. There still will only be one winner and several losers, but atlas both parties would fairly know what they were up against, in a more transparent system and enjoyable process.
OREA is seeking feedback on whether it should push the provincial government into modernizing the real estate industry to make it more transparent. Australia is already doing this – and even opening up their MLS to sold prices (more on that in another video). In Melbourne, they littering gather infront of the house on a offer day and each party bids infront of each other. This is the most transparent way to know what you’re up against.