One of Canada’s largest real estate associations was less polished than usual.. Earlier today, the ruling Liberal Party of Canada (Liberals) announced their housing platform for the election. Amongst the new proposed tools to tackle soaring home prices was a ban on blind-bidding.
The Ontario Real Estate Association (OREA), a lobby group for Realtors in the province, is not a huge fan of that plan. The proposal involves changing the criminal code, which they feel is extreme. In an email, they said the strategy would bring a “new meaning to house arrest.” Further, they argue the alternative proposal of transparent auctions would turn Canada’s real estate market into a circus.
OREA Says The Liberals Will Give A “New Meaning To House Arrest,” By Regulating Selling Methods
OREA is upset the Liberals have proposed regulating the home selling process. In an email titled “Liberal Housing Plan To Criminalize Hardworking Families,” the industry claims the Liberals will send you to jail if you don’t sell your home as directed. This is in regards to a proposal to ban blind bidding wars. To enforce the restrictions, they plan to use the criminal code to outlaw opaque bidding.
They also allege the party believes homes “should be done entirely through auctions.” Similar to Australia, where OREA claims it’s the norm. Adding, “action fever creates a three-ring circus on front lawns, as hopeful buyers crowd in front of a home with a live auctioneer, or online, and the bidding begins.” Sounds fun, but not exactly what the proposal is, which would more than likely go to the industry for polishing first.
Source: OREA.
Canada’s Liberals Plan To Make Bidding Wars Transparent
The Liberals have proposed a right to home inspection and a ban on blind bidding. In hot markets, buyers often skip the home inspection as a way of sweetening the offer. This helps sellers avoid having their home fail an inspection, for whatever reason. Preventing a failed inspection means not having your home sale fall through. It impacts buyer’s in an obvious way, but it’s not clear to what extent this problem exists.
The second issue is a ban on blind bidding, and it’s a very big issue for some agents. Blind bidding is when more than one buyer places an offer, and none of them know what the other is bidding. In most situations, the seller’s agent can’t disclose the contents of another buyer’s offer. Buyers have to guess what will beat the other person’s bid.
The buyer often just gets one shot to guess what everyone else is offering, and then add a premium to win. This can mean a buyer will pay thousands, sometimes hundreds of thousands, more than the next bid. In some cases, the other buyer may have offered less than the asking price, but the seller landed more cash than they could hope for. Exuberant buyers often just max out their budget, which is ever-inflating due to rates.
Transparent Auctions Won’t Turn Canadian Real Estate Into A Circus, It Already Is One
The auction process in Australia isn’t exactly how they described it. It’s typically only seen in major cities, and even so — only in hot markets. It does exist though, and they’re often 3-ring circuses.
Auctions have become popular recently, after the pandemic surge in sales. Sydney, for example, saw 78.4% of its home sales in Q2 2021 conducted by auction. This was the highest rate since 2018, with the number of auctions falling with home sale volumes. It might also be one of the few places more expensive than Canada.
Similarly, not all home buying in Canada is done by blind bidding. Even in heated markets like the recent one, only a small number of homes are sold by this process. If they were forced to be transparent auctions, it would likely only serve as a direct substitute. The argument that it turns blind bidding into a 3-ring circus ignores that offer nights are also 3-ring circuses.
Does blind bidding lead to higher home prices? Sure, in markets with substantial demand. Just because an agent is holding offers, doesn’t necessarily mean they’ll get any. Ontario is currently seeing fewer and fewer blind bidding wars.
Can eliminating blind bidding and adopting transparent auctions send prices higher? Once again, sure. Only in markets with strong demand though. In reality, these are direct replacements for each other, that don’t necessarily stimulate any more demand. If no one is showing up to blind-bid offers, they won’t show up to an auction. At the same time, it saves only a few buyers cash. Although there’s something to be said about the influence of a marginal buyer on comp prices.
Most importantly, the Liberals aren’t proposing to criminalize all methods of selling homes. Listing and selling a house, like the majority of home sales are conducted, would still be legal.
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Canada is pretty much Siberia.. harsh weather and not desirable to live. It’s beyond criminal what they charge ppl to live these days. Time to lock up these socialist bastards
Hey bud, go f yourself.
Either sarcastic or an idiot. Single family dwellings should be for Canadians only, NOT for corporations or for foreigners. I do not really care about strata titles, just glorified rent.
Times are changing. Real estate will no longer be the play it was over the past 2 decades in Canada. Individuals know this, banks know this, and the government knows this.
I would advise that anyone who is highly leveraged into the real estate market to cash out soon, as this is just the first of many regulations to come. Millennials have showed their teeth and are quickly becoming the dominant voting force in Canada, and guess what? Most of them don’t own real estate.
There is no “inflating away the debt”, there is no “waiting for income to catch up”, the best everyone can hope for now is a soft landing.
See you guys on the other side, and to all the realtors out there, I hear subway is hiring.
one world government will control our homes, salary and religion and the millineums are the perfect generation to buy into this tyranny… YOU are spot on no other generation would of ever bought into this deception.
Let the market forces work this one out. When supply starts to increase further (and prices drop) my guess is blind bidding will all but disappear. Government should not interfere in the market.
Bidding should not be regulated.
Buyers who are made fools till date must keep becoming one.
OREO is 100% right. Buyers can take more and more debt and they should be given more and more.
Criminal charges for the citizens trying to survive in this government manufactured bubble???
Why not criminal charges for the politicians that brought us here?
It’s a disgraceful deflection. Shame on the myopic liberals who seem to think every problem is someone else’s fault. #growup
Rob, you nailed it , this toilet paper run on housing is absolutely government induced this is the first steps to taking our properties, it will very soon be all state owned …. yikes, we are headed the new world order.. and it ain’t pretty…. pretty terrifying…
can I have some of the crazy juice you’re drinking please
Criminal Charges if you continue to create blind bidding auctions for houses.
Considering it’s the Realtors who setup up the blind bid process, it’s only the Realtors who stand to lose out in the change.
You’re making a mountain out of a molehill. It’s not criminal to sell your house. It’s just an increase in transparency. One that should make literally everyone happy. The only reason to argue against transparency, is if you are trying to hoodwink someone. End of story.
If they really want to lower home price they can simply tax people or corporations with multiple residential properties and force them to sell. Instead we have this minor tweak. This tells me they are infact trying to maintain current prices. All these small policies are meant to pacify the public.
I agree. These policy changes are a joke and won’t do squat. If anything the conservatives plan seems to be the best if they can keep and deliver on their promises. I think the Libs messed up bad calling an election at this time. It also doesn’t help that this “wokeness” from the U.S. seems to be adopted by some libs here which doesn’t help. My guess is we end up with a conservative minority government or remain a lib minority.
The only group I could possibly trust less than liberals would be realtors. Any rule change that upsets realtors is likely a good change.
Wonder when people will realize that the answer is not more government intervention.
Probably around the time they realize that the current government intervention (CMHC insurance that lowers risk for lender) is already way too much. In other words, never.
Agree.. Housing/shelter/living is a necessity like food. When prices (ownership or rental) go out of control or starts to impact cost of living, negatively impacts majority especially first time buyers who want to own or new renters who are forced to pay crazy rental prices compared to their incomes.
Homes should not be only for speculative and/or monetary gains. Everyone has to pay taxes on miniscule bank interest income, stocks and other investments. So why not start heavily taxing people who have more than 1 property. Increase tax for 2nd, 3rd , 4th property etc.
Corporations and people in disguise of corporations should be disallowed to even buy residential real estate in addition to Foreign buyers govt. is proposing. This should level the field for many prospective first time buyers and hopefully make rents more affordable.
We need supply, supply, supply, supply of new homes. Reduce the immigration to 25,000 per year until the govt fixes the housing crisis. We need a 50% price crash of houses for it to be barely affordable.
The hypocrisy of the Trudeau
Government is beyond belief.
First they create a housing disaster via there policy of quantitative easing and related policies , ignore IMF ‘S direct
and pointed advice to end there disastrous policy .Than this cynical piece of work ?
Also the authors view on outcomes seems subjective.I.E. based on personal opinion.
Author seems more interested in slamming OREA than looking at the big picture which includes more governmental overreach
and intrusion into the free market
Umm, OREA knows how campaign promises work, right?
They’re getting roasted in the comments on the Twitter post. I don’t think the public is buying into the message heh
HAAAAA! Cry harder dingdongs.
OREA want to manipulate to get higher prices simply because it makes realtors more. 50% of realtors are crooks. 100% in my own personal experience. How do you tell someone to come in “High and hard” without an inspection if you really want what’s best for your client? This is absurd and anyone telling people this is unethical and frankly uneducated. Home inspections should be a must. Just as an appraisal should be. People overpaying and falling for these shady Realtor practices have caused this situation. Get rid of holding offers, allow inspections and appraisals and the market will calm down a bit. Then if needed raise rates by 1% and ban foreign buyers.
Hey realtors, I hear subway is hiring.
To be honest, it looks to me like a “Cry Wolf!” and a case of false indignation.
By the association “crying wolf”, they feign legitimacy to Trudeaus “only a PROMISE” of doing something about real estate. Note PROMISE is not the same as guarantee or plan or any real world action. By having the association act this way, it actually seems Trudeaus going to do something. Right.
The real estate associations and the government are scratching eachothers back. Government likes high real estate prices because its more property taxes for them. Real estate associations like the current gravy train. The only person looking out for your wallet is yourself. Not the Association, not the Government and not the Banks.
May we all have the wisdom to navigate to this stealership mess.
I don’t see any issue with open bidding, allowing for home inspections, and let’s not forget financing. A home purchase should have protection in place for both seller and buyer which currently is not the case.
I noticed none of the parties want to do away with opaque ownership laws…
OREA, as in Tim Hudak’s baby? Hudak still has his hands in everything political. Guaranteed his hands were involved in Bill 108. Even if the Liberals had an excellent plan, he’d make sure they said something negative. I’m really over every influencing body and association being linked directly to a party that benefits from whatever they say. I’m even more frustrated with a public that doesn’t care about this stuff, so long as their brand of politics is winning.
In Sweden, bidding is entirely public. It is conducted by sending an SMS to RE agent, which in turn broadcasts the bid to all participants, including the seller, via SMS.
Interested observers can also sign up for SMSes, or track price development via property web page, where bid history is listed (who, when and what amount).
Bidding usually lasts from few hours to several days. During the last year, I think prices closed on average 10% over asking, with significant number even above 20,30%.
Now, if you want to keep RE prices in check, simply force sellers to sell at fixed price. No bidding. If 30 buyers make offer, either pick by lucky draw, or whatever else criteria seller wants to go by.
Why the hell do we care what the real estate lobby says? That’s asking the fox is the gate on the henhouse feels fair to them.
Housing in canada is totally out of control , tax the hell out of 2nd homes and corporations. Do away with REIT housing as retirement fund is a huge problem.