This op-ed by KWAR’s president Nicole Pohl appeared in Hamilton Spectator and The Waterloo Region Record on May 20, 2021.
There is a growing narrative claiming the practice of “blind bidding” has played a role in driving up home prices and that prices would decrease by introducing an open auction process.
As a realtor, I would be in favour of greater transparency so long as it is supported all parties. While we all want to find easy solutions for the insanity of the market, I would suggest there are no quick or easy fixes.
In today’s housing market, demand has grossly outpaced supply. This has led to many disappointed and heartbroken would-be buyers. Time after time I have worked with aspiring young home buyers, with good-paying jobs, who have been crushed by losing out to competing offers. So no, I have not been “breaking out the champagne” as was suggested agents and sellers might be doing in your May 10 editorial.
As realtors we feel the stress our buyer clients go through and are saddened when they miss out. While there may be the odd lucky “unicorn” seller that is selling and has no need to purchase, they are rare. Most of our sellers are also buyers who end up having to purchase in this same hypercompetitive market.
In a typical home sale in Ontario, each party puts in their best offer and a seller selects the most appealing. This process has been dubbed “blind bidding.” And in this overheated market, the practice of blind bidding has raised valid questions. I welcome the additional scrutiny. One area of concern is when the listing brokerage allows bidders to “improve” their bid. I believe additional transparency is required to prevent the spectre of misconduct. My advice to my clients is to be cautious of this practice and to make their initial bid what the home is worth to them.
In Ontario, provincial legislation governing all realtors restricts the selling agent from disclosing anything more than the number of competing offers to buyers and their agents who have submitted an offer. I am not allowed to disclose any additional details about the other offers, such as competing prices or even who the other agents are.
In the right circumstances, auctions can be a good alternative for selling a home. But they are not new as sellers have always been able to sell their homes by auction in Ontario. The reality is that most sellers do not use an auction, and there are many reasons for that. What cannot be lost in this conversation is homeowners should have the right to sell their property however they want.
If you have ever attended an auction, you quickly learn that transparency is not guaranteed, and emotions can run very high causing people to make irrational decisions. In Australia, where auctions are much more common than they are in Canada, housing prices are skyrocketing, too.
The greatest reason prices have been increasing is new home construction is not keeping pace with new buyers entering the market.
Under these conditions, regardless of how homes are sold, we will continue to see these record-high prices. Even with a hypothetical open bidding process that has been bandied about, so long as we continue to have many buyers competing for a limited number of homes there will still be that one buyer willing to pay more than anyone else — and there will be as many disappointed potential buyers. The only meaningful fix to this is to increase supply to match the growing demand.