Blind Bidding Purchasing

After the recent election win, the Liberal government may adopt one their election campaign pledges to end blind bidding on properties in Canada.

Blind bidding prevents the competing purchasers from knowing the bids of other buyers. This system is blamed for driving up Canadian home prices. Also, buyers feel there is a lack of transparency and added stress during the blind bidding process.

The main benefit of an open style auction is obvious – the bidding price is disclosed to all potential buyers.

Ontario Real Estate Association is in support of revamping the Real Estate and Business Brokers Act to allow agents to not only be able to disclose offer price, but additional details such as closing dates and any other conditions to potential bidders if multiple offers are on the table.

OREA CEO, Tim Hudak says there is growing demand for more transparent transactions, something that is already offered in some U.S. states and in Australia.

“We believe that buyers and sellers should be able to choose if they want to use the traditional offer process or an auction,” Hudak said. “The current landscape of bidding wars in Ontario’s housing market is emblematic of a much larger issue: there is simply not enough supply to meet demand, leading to multiple offer situations and higher home prices.”

However, cancelling blind bidding might not be the only remedy to stop rising prices. For example, although open style bidding is used in Australia, house prices in Australia have been surging at the fastest pace in almost three decades.In an open auction the pressure is still immense, because there is very little time to think and make a decision. This type of pressure may lead to impulsive spending by competing bidders and buyer’s regret. Also, there is a chance that buyers may collectively bid at lower-than-justifiable price on a property in an effort to bring the sale price down.When it comes to bidding wars, it helps to understand that they are the result of an extreme seller’s market. And regardless of the selling process, the only way of succeeding in the seller’s market is sticking rigorously to what the property is worth to you, and not to getting carried away by trying to win.