Bidding Rule Change Could Create Buyer's Market
The Ontario government is looking at a section of the Real Estate and Business Brokers Act to try and avoid bidding wars on homes.
Currently the seller's broker can only disclose the number of competing offers, not the financial details — this week's consultation will require the highest bid be disclosed to a potential buyer.
Remax's Goran Todorovic says, in a hot market, buyers can blindly offer more than what they initially planned on spending in hopes of beating their competitor.
"I've seen prices vary $60,000, $70,000 on multiple offers from the highest to the lowest price. It's not a win-win for the seller; it's a win for the buyer, definitely," says Todorovic, who points out that sellers usually become buyers at some point.
"The buyers will be involved and know what the other offers are, which is great for the buyers and not for the sellers," he says.
Todorovic says the timing of the move reeks like political posturing.
"Over 60% millennials are eligible to vote in the next election so the [Ontario PC] government wants to do what's best for them to get re-elected. They realize they have to give incentives to put them back into the buying power," he says. "You're going to see lower interest rates and things like this will definitely cool the market."
The Ontario Real Estate Association has been pushing for a change to the rule and a broader review of the act, which Todorovic says also prohibits agents from incorporating for tax purposes.
At the end of the day he says it's about giving the customer what they want and home buyers want to see a change.