The two top Remax execs call for more transparency in bidding on houses
A home is for sale in Bridgetown, Nova Scotia.
PAUL DARROW / The Globe and the Post
The two top managers at Re / Max Canada are calling for more transparency in the bidding process and saying that homebuyers should know what their competition is offering.
The common realtor practice of blind bidding has angered buyers and is held responsible for driving up prices in the country’s overheated property market. Some economists and a handful of brokers have said that blind bidding must stop.
The Re / Max executives are the most prominent voices in the real estate industry calling for change. Re / Max is a large real estate company in Canada with a 33 percent market share and more than 21,000 licensed full-time brokers operating here under its brand name.
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“We have to please consumers, and it is obvious that they want reforms on blind bidding,” said Christopher Alexander, Re / Max’s chief strategy officer and executive vice president for Ontario and Atlantic Canada.
Mr. Alexander’s counterpart for Western Canada, Elton Ash, agreed, saying, “An open auction style process is the most transparent way.”
Real estate sales practices are regulated by the provinces and their real estate regulators. Laws in British Columbia and Ontario, home to the most expensive real estate, state that the seller can decide for himself whether he wants an open, auction-like process or a closed process.
The Re / Max executives say the rules should be rewritten. Mr Ash said that while auctions are the most transparent, consumers view them as a last resort. He said an alternative would be to ask the seller’s agent to disclose the bids to bidders so that they know what they are dealing with.
Mr Alexander said the bidding process should either be opened so that buyers are “exposed” to competing bid prices, or bidding rounds should be prohibited so that the seller’s agent does not keep coming back to buyers asking them to raise the price. “Open it up or stop the endless rounds of improvement offers,” he said.
Mr. Alexander said he would propose these options to the Ontario real estate regulator, the Real Estate Council of Ontario (RECO).
The comments from the Re / Max executives do not mean that the policy will change for brokers working under their brand. Agents may not welcome the change as their commission usually increases with the value of the transaction. Home sellers are unlikely to like the idea either, as they have benefited immensely from the bidding war.
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Since the pandemic began, the average sales price in the country has increased by more than 30 percent, with smaller Ontario markets such as Woodstock, Ingersoll, Prince Edward Counties, Lakelands and Bancroft increasing by more than 40 percent.
BMO banks’ economists have said opening up the bidding process could help bring skyrocketing house prices down without negatively affecting other parts of the economy. Economists have said, “While this will not cool the market on its own, it will limit the bloat that we are now seeing in a very tight market.”
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