Will a ban on “blind bidding” cool the Canadian real-estate market?
Kelly Medeiros has been bidding on houses for months. So far, the 31-year-old has made five offers on homes in the Durham region since July and has lost every time to a higher offer, falling short anywhere from $20,000 all the way up to $110,000.
The problem, the Toronto-based media professional says, is that she hasn’t known how far off her offers have been from winning until the houses sold and the sale price was made public.
“If there are 10 offers around [the same amount] and somebody learns that there are 10 offers, they often panic and offer way more than they need to,” she says. “Like maybe you could have had that house by offering an extra $10,000, but instead, you’ve offered $100,000 more.”
Canadians like Medeiros are experiencing the frustrating side of “blind bidding” — a common real estate practice, also known as sealed or closed bidding — that prevents hopeful buyers from knowing what others are offering for the property. The tactic is hotly debated and often blamed as a contributing factor in Toronto’s overinflated market. Leading up to the 2021 federal election, the Liberals made the promise that if re-elected they would ban blind bidding nationally, by implementing a Home Buyers’ Bill of Rights , to help cool housing prices and make the process of buying a home more “fair, open and transparent.”
But experts have mixed opinions about whether a flat-out ban is the solution to bidding wars. Some say it won’t bring down prices at all.
According to Murtaza Haider , a professor of real estate management at Ryerson University, there’s plenty of anecdotal data and speculation that indicates closed bidding drives up housing prices. But there isn’t raw provincial data to determine how much, exactly, the practice is jacking up sales.
In Ontario, real estate rules prevent the selling agent from telling realtors and their clients the contents — that is, the offer amount — of competing offers. All they can disclose is the number of competing offers to every hopeful buyer.
To make meaningful change to the industry, the government’s first course of action, Haider says, should be to put together a commission or an advisory group that includes all stakeholders, including representatives of buyers, sellers, the real estate industry and the Canada Mortgage and Housing Corporation. From there, amendments to real estate rules can be made to enhance the marketplace — something that can be aided with technology.