In Canada homebuyers have been blind bidding against each other for decades, but other countries around the world have their own way of selling houses. For instance, in Australia, the process is transparent. On bidding day, typically a Saturday, interested buyers gather on the sidewalk outside the home and place their bids out in the open, in an auction led by the seller’s agent. As homebuyers become frustrated on being out-bid for homes and not knowing why, a system closer to the Australian method is beginning to gain traction. Some real estate agents believe that transparency may make house prices more affordable.

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Philip Kocev
Philip Kocev

“Currently in the multiple offer process in Ontario, offers are submitted to the seller, and only the seller and listing Realtor know the content of all the offers, as Realtors are prohibited by law from sharing details of any offer with other buyers bidding,” says Philip Kocev, managing partner at iPro Realty in Toronto.

Kocev knows buyers are frustrated at having to “guess” what price to offer to win the bidding war and sellers are often also frustrated that they can’t ask a buyer if they are willing to beat the current best offer. “This problem is compounded when a listing agent has their own offer and therefore knows the details of all competing offers. Even if they are acting 100-per-cent ethically, this scenario fosters mistrust and suspicions when a listing agent’s buyer is the successful buyer. There have been increased calls to implement a transparency model, where all buyers bidding on a home would know what the best offer is and are given the opportunity to beat it.”

Kocev says it could be argued that the process has “added to the excessive price growth we continue to see in many areas” in Ontario.

Recently iPro Realty asked consumers and Realtors in the GTA for their thoughts on offer transparency. More than 1,000 Realtors and 150 consumers responded, with the following results:

  • 88 per cent of consumers think transparency should be allowed
  • 72 per cent saying it should be mandatory
  • 89 per cent of Realtors think there should be transparency
  • seven per cent are undecided
  • only 11 per cent say no to offer transparency
  • 75 per cent of Realtors surveyed agree it will bring greater credibility to the offer process.
  • Only 41 per cent of Realtors and 34 per cent of consumers think implementing transparency may have a cooling effect on the market.

“With the Ontario government reviewing our current real estate legislation, now is the time for Realtors to be bold and provide input. We can help ensure that as many people as possible realize their homeownership dreams and that they are protected in the process of doing so,” Kocev says. “Allowing the option for offer transparency doesn’t have to be complicated. Sellers, through their listing agent, should be allowed to disclose the best offer on the table to all competing offers, with all participants given an opportunity to resubmit their offer or walk away.

Kocev says, “What we are talking about is not an auction process (although we feel those should be allowed also, the more choice for consumers the better). What we are suggesting is keeping the process the same as it is today, but allow Realtors to disclose the top terms of an offer to competing buyers – as long as personal information about buyers is kept confidential (unlike today where we can’t say anything about another offer.

“If we don’t get involved now and help shape the offer process, government could impose changes upon us that may not be in the best interest of our industry or consumers,” Kocev says.

Tim Hudak is CEO of the Ontario Real Estate Association.
Tim Hudak

Tim Hudak, CEO of the Ontario Real Estate Association, says sellers in the province can opt for the auction process now, but it’s not a popular choice.

“This very private personal information, like how much you can afford to pay, how much you’re going to have to borrow – not every buyer wants to sell that kind of personal information,” he says.

Hudak says OREA is in favour of more transparency, but cautioned against mandating any one system, such as the open-bidding auction process.

“We believe we should give people a choice,” he says. “Fundamentally, buyers and sellers should decide if they want the traditional offer process, (or) do they want to have an open option.”

Hudak says an open system wouldn’t cool down the market. Instead, it could result in “auction fever” that could drive up property prices. “That fever catches on and it can drive to higher prices at the end of the day,” he says.

“With transparency, the best offer always wins,” says Kocev. “Even if the best offer is not the highest price, the listing agent is currently not allowed to divulge the terms which the seller finds more attractive than price.

“The results of our survey clearly indicate that both Realtors and consumers want change. As the ministry conducts its review over the next few months, we call on our fellow brokers, boards and associations to join us in providing input into this important legislative change.”

22 COMMENTS

  1. An auction? Seriously? So the offer becomes a one-liner based on price? What about the other terms of deposit, closing date, chattels, buyer conditions, seller conditions, etc.

    So, my Buyer would’ve won the regular way, when he offered $20,000 over list with a 45 day closing, but now his offer can be bettered by the 9 other people he was in competition with? When does it stop? So, Buyer #3 says ‘Oh, okay, well, I’ll offer $21,000 over list and a 40 day closing’. And on it goes… ya right… that’ll work… not!

    You want fairness? How about no dual agency allowed, no bully offers allowed, 801 form signed, home inspection condition mandatory, financing condition mandatory (only for bank red-tape), and for a great topper… are you ready? How about every Buyer needs to supply with their offer a bank letter saying that their pre-approved for the amount bid.

  2. “Kocev says it could be argued that the process has “added to the excessive price growth we continue to see in many areas” in Ontario.”

    Kocev is either incompetent or has sold less than 5 homes in his career and 100% has never looked at the actual on the ground results in Australia.

    Knowledge of the best offer is what drives prices UP not down, anyone who has been in a multiple offer situation more than once or twice as a listing agent knows this. Undeniable. If a buyer knows that $1000 or $5000 more would get them the house they would offer that vs “offering what they think the home is worth in today’s market based on guidance from their Realtor”. Then the next person would offer another $2000 because they know the price went up by $5000. Then the next person would offer another $1000 because they feel secure that they are not offering “too much” in blind fashion. This is how auctions work, auctions drive prices up not down.

    Further, Australia’s housing market is equally (or more so) out of control. The transparency process does nothing to control prices. Zip. Zero. Nadda. Kocev should educated himself before speaking based on assumptions.

    Lastly, like Hudak said there is an option to go for an auction type process now but no one chooses it. Why not, is the prudent question to ask?

  3. There are so many holes in this article.
    The auction process in Australia does not serve the buyer, there is no buyer representation.
    Buying for a buyer in a sellers market is hard and competitive just as selling for a seller in a buyers market is hard and competitive. In a balanced market it’s easier.
    The realtor writing the article believes this is the way the market will always be, multiple offers homes selling over list price. Markets change, and one day you will be begging realtors to show your listing.
    After 32 years of being a realtor, I know one thing for sure, markets change, new realtors in hot markets always want to change something to be more “fair”.
    Wait a while and this market will change, and then we will see who can sell.

    • Good comment! The other side of the coin is the buyers today when along comes a seller’s market will be whining that they dont want an auction because of the low bids and absent buyers.

      One other point not made when touting the Australian auction is that buyers are responsible for their own due diligence costs prior to auction, they must put up the same deposit, accept the seller’s terms and pay the auction fees, plus a reserved price could mean no one wins thus the outrageous prices by buyers wanting to limit their number of auction tries.

  4. As per a REM article I read the majority of agents are lucky if they get one property listing per year making them Master Buyers agents. Of course, these buyers’ agents would want to rob from the owner to benefit their client the buyer. This question needs to be asked directly to the homeowners that are cashing in and being able to enjoy their golden years from the investment and the sacrifices they made. What this regulation means is taking from one person (the seller) and giving it to another person (the buyer). Real estate is likely the most important part of a person’s retirement funding and the government should keep their grimy hands off. In regard to removing “double ending”. I think it would be ridiculous for a seller to hire an agent to not sell their home but to merely make it available for sale. As a listing agent that has a global network, my client wants to list with me because of the results I get and sometimes that means bring in my own buyers and paying a higher price. Why do Canadians want every aspect of their lives regulated by a government body that the only thing they are good at is false propaganda, lying and false promises. Nothing good every comes from government intervention. Here’s an idea, abolish the land transfer tax 100% for first time buyers purchasing their first primary residence and for sellers trading up to larger personal residences freeing up entry level homes for first time buyers. This would increase the supply without stealing earned equity from the senior’s market. The only people that should be paying land transfer tax should be investors and that would increase supply. What happens to that land transfer tax anyway? Does anyone know? Perhaps floating a big yellow rubber duck in the lake. We should elect all these people again. What is fair for one, is not fair for the other.

    • Well at least you’re honest as to why double-ending serves only yours and the seller’s bank accounts and best interests and that your duty to be impartial isn’t even considered. Buyer beware indeed!…

      “as a listing agent that has a global network, my client wants to list with me because of the results I get and sometimes that means bring in my own buyers and paying a higher price.”

      You’ve proved exactly why proponents of double-ending want to keep it that way! You’ll always find some excuse.

      But as much as you might be a busy guy, it’s downright shameful to suggest that a seller’s agent’s job as fiduciary to guide and protect them is non-existent…

      “In regard to removing “double ending”. I think it would be ridiculous for a seller to hire an agent to not sell their home but to merely make it available for sale.”

    • Perfect analogy. We all know where the money goes. Thrown away on socialist policy and world wide “we” type nonsense to get re-elected and leave a legacy paid for off the backs of hard working Canadians. When will it end?

  5. I think this whole debate is deeply skewed. We currently are finishing a cycle: a seller’s market and buyers are unhappy. I think people ( many agents and buyers) are fast forgetting what happens during a buyer’s market and there are many or a balanced market and there are many as well. The seers in that market hardly get big bucks or what they want. It is sometimes nerve wrecking for them. That is what a free market is. Sometimes it favours the buyers and sometimes it favours the sellers and sometimes it outs them on equal planes. That is a free market and I think it can stay the way it is. Auctions are great for price only dependant items. Real estate is more complex, involves many aspects and if people want to take risks, buyers or sellers depending on the market we are in, they should be allowed. I have watched this market get more and more regulated, some is good and others not so much. I believe sellers and buyers are mature enough to handle freedom of choice. Think about this, by going transparent, we are skewing the market against the sellers as there is no support for them when the buyers market and the balanced market arrive and it is and it will. Then what? We create buyers for their homes out of thin air? Because in a sellers market it is very nerve wrecking having a property sit and sit and their plans compromised because they can’t selle their homes despite price reductions and loosing hard earned equity.

  6. I think reminding everyone of the counter Offer option and not allowing agents to “personally” represent both parties in a multiple Offer situation, would address most of the frustration Buyers have expressed with this issue.

    • Have your broker present all the other offers without the listing agent seeing them. End of problem. End of any advantage the listing agent may have. Seller gets full service and the comfort of his choice of listing agent being his selling agent. Have you forgotten who is paying these big commissions? Leave the meddling hand of government out of our business. I have seen lots of swings in the market over five decades of selling homes.

  7. There are several things that can be done but it depends on what problem you want to solve. At the very least double ending should be outlawed (i feel the knives in my back already) and two conditions should be made mandatory… Financing and inspection. Far too many buyers are unaware of their REAL buying power. Currently no one is working for the buyer because the seller, their Realtor and the buyer’s Realtor all benefit from the closed system we now have therefore I also feel that the Price, Deposit and Conditions should be available for all to see during the offer process. Bully offers should eliminated and offer registration through the brokerage (using the 801) should be compulsory. lastly I think it might be a good idea to create a mandatory buyers registration system so that unless a buyer is registered and signed with a Realtor they do not have access to homes on the MLS.

  8. If the proponents of open auction in housing has ever been to a real auction of any kind, then you know how many phantom bids are there in person and on line. Do every bidder ends up winning at each auction? certainly not. Why are some folks so intent on killing a fair, equitable, regulated way of selling real estate?

    • Totally agree with Sardool. The current system does not foster higher price than an auction for the reasons Sardool mention amongst other reasons. The Human reality: People can loose contact with reality in an auction setting, possibly more than in quiet setting in dialogue with their realtor, where you can dialog with trusted ones even in some cases.

  9. “Some real estate agents believe that transparency may make house prices more affordable.”
    What is really being said here is that sellers will get less for their property. That’s what “more affordable” means. So, in this article did they interview sellers and ask them if they would accept 10% or 15% less for their home, so we could have more affordable properties? Absurd and one sided.

    Kocev knows buyers are frustrated at having to “guess” what price to offer to win the bidding war and sellers are often also frustrated that they can’t ask a buyer if they are willing to beat the current best offer.
    100 % false. We CAN ask a buyer or buyers to pay more than the “current best offer”. We just cannot disclose the contents of that offer.

  10. Again -thanks REM for airing this person/firm’s attempt to revive open-bid AUCTIONS as a promotional idea and proposed Unique Differentiator.

    It’s not new, it’s not popular and it’s not catching-on – why? because not-many people who have the capacity and firm desire to BUY NOW in a competitive marketplace WANTS it. AND because not-many Sellers think they’d be better-off using that system.

    Why do you think OREA has “such a good and complete” position on this point? They know the facts and the public and their members. It’s a non-starter.

    It only appeals to newbies and blue-sky dreamers who think it will appeal to the Altruism-despite-reality and Virtue-signals-R-Us segment of the NOT-Buying public (and to that segment of the media that will give the Advocate-Registrant of this-iteration of open-bid AUCTIONS some free coverage).

    Nice try (Featured Registrant and author)
    Let’s talk again in 5 years.
    Maybe you will still feel the same way.

  11. “Kocev knows buyers are frustrated at having to “guess” what price to offer to win the bidding war and sellers are often also frustrated that they can’t ask a buyer if they are willing to beat the current best offer.”

    Of course they can. Ever hear of a counter-offer? Don’t jump to the conclusion that the process is unmanageable simply because many aren’t able to manage it. It’s the people, not the process. The bar is low; critical thinking is not a prevalent commodity among practitioners, unfortunately.

  12. We are supposed to be in free country. What a seller gets for offers is nobody’s business but the seller. No disclosure should be allowed. There is a reason why It is against the law to disclose offer details. To protect the seller and buyers best interest. We have been allowing more and more government control over our lives. Right now it’s a buyers market give it time and like the weather that will change
    What’s next they tell the seller what they are allowed to sell for to control the market??

  13. Every single one of these articles makes it seem as though the only way properties are sold downunder is via Auction. It’s also fraught with its own problems.

    So let’s not overcomplicate our system by swapping it for another problematic system.

    The answer is so simple but ORE does not want to even recognize it:

    1) If there an offer date and time? – then it must be adhered to. Allowing pre-emptive offers is nothing but a bait and switch tactic which cancels out the very idea there will be a holding off of offers.

    2) Agents should also be made to publish in public remarks, an estimate of market value and the calculation of that market value which will at least signal to buyers what is expected of them.

    Of course I doubt even 50% of the agents surveyed would agree to this because they prefer the feeding frenzy that ensues because of unqualified buyers.

    Hasn’t the rule of thumb always been that a property is worth what a buyer is willing to pay?
    Nothing is going to prevent a buyer from coming along and offering an amount that no other buyer is even prepared to pay auction or not.

    • Would this alternative be more acceptable? As in England?

      How do properties ever manage to close? Particularly if there is a string of sales attached…

      Carolyne L 🍁

      From Google:

      “gazump (third-person singular simple presentgazumps, present participle gazumping, simple past and past participle gazumped)
      (British) To swindle; to extort.
      (British, Australia, real estate) To raise the sellingprice of something (especially property) after previously agreeing to a lower one.
      1980, The Estates Gazette, Volume 256, Part 2, page 902,
      If one believes that morality plays no part in such a transaction, and that the law is all that prevails, then I believe society is the poorer. Clearly no surveyor refuses to act for a client who gazumps — but while the practice is legal it can hardly be described as moral, and the position of the surveyor is far from clear.
      1981, Geoffrey Chevalier Cheshire, M. P. Furmston, Cecil Herbert Stuart Fifoot, Cheshire and Fifoot’s Law Of Contract, page 35,
      During the early 1970s however in a period of rapidly increasing house prices it came to appear unfavourable to buyers since it allowed the seller to ‘gazump’, that is to refuse to sign the formal contract unless the buyer would agree to an increased price.
      (British, Australia, real estate) To buy a property by bidding more than the price of an existing, accepted offer.”

  14. There is so much more to the definition of best offer than the price.

    I haven’t seen anyone on REM speak to the topic from the relocation perspective. First the company relocating a homeowner to another city or another country has a boatload of work to do in establishing a subject employee property value; all but impossible in a market like Toronto today. The employee typically is offered a guaranteed price but subject to permitting the employee going to the open market himself to see what the market will bear.

    Typically the corporation works with a professional appraisal company to arrive at a relo property value.

    How is this now accomplished? There are legalities involved; timelines by which the employee must be at his/her new physical location, schools when involved, spouse engagement with new job (disruption that could involve giving up retirement benefits gleaned over many years with their own employer)… so many things to consider, maybe the least of which is how to decide which is the “best offer,” not necessarily price.

    A multiple buyer might be shocked to see a property sold for less dollars than he offered; his buyer agent didn’t educate him as to a relo possibility being the seller’s driving force in accepting a particular offer.

    Anyone out there care to address this topic relative to seller’s choice of accepted offer price? it’s not always about highest price.

    Carolyne L 🍁

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