Is Blind Bidding Over in Ontario?

Is Blind Bidding Over in Ontario Real Estate?

The Ontario real estate market is set to undergo a transformative shift with Blind Bidding during the introduction of the Trust in Real Estate Services Act (TRESA). As of December 1st, 2023. TRESA is going to replace the long standing REBBA (2002) Act that has been the standard for real estate professionals since 2002. Among the significant changes, is one of the most anticipated and discussed – the modifications to blind bidding practices. In this blog post, we’ll delve into the intricacies of these impending changes, exploring what they mean for both home buyers and home sellers in the province of Ontario.

 

Understanding Blind Bidding in Ontario:

Blind bidding, is the current standard practice in Ontario’s Real Estate Market unless going the route of auctioning a property. The blind bidding process is one where potential home buyers submit an  offer on a property without knowing the details of other competing bids. While this offer process has it’s merits, such as maintaining privacy for buyers, it has also been criticized by many for contributing to inflated prices and a lack of transparency for home buyers, especially during the real estate craze of 2020-2022.

 

The TRESA  (Trust in Real Estate Services Act) Effect on Blind Bidding:

TRESA aims to bring about a fairer and more transparent real estate landscape, a fantastic and much needed change to the way real estate is purchased and sold throughout Ontario. One of the key changes involves addressing blind bidding practices. Moving forward, home buyers will have access to crucial information about competing bids, providing a more level playing field and empowering them to make informed decisions, well, kind of. The key to this change with the introduction of TRESA is that the Home Seller has the option of Blind Bidding or not, and to allow for this information to be shared to Home Buyers in the offer process, it’s not the set as the standard.

Home Sellers Make the Decision on Blind Bidding:

Home Sellers will have the ability to decide whether or not they want to have an open offer process or if they want to keep the contents of the offers confidential. When it comes to Real Estate Professionals, when working with a Property Seller it is their duty to protect that Seller and look out for their best interests. When disclosing the contents of the a potential Home Buyers offer this puts the Property Seller in a vulnerable position should it be less than the asking price, it also changes the likelihood of a potential Home Buyer to submit a strong initial offer. Advising a Property Seller as a Real Estate Professional to do an open offer process in most cases would put them at a  strong disadvantage. Sellers also have the ability to change their decision on how they wish to conduct an offer process at any moment. If for example they believe the potential home buyers are willing to go higher with multiple offers, they can opt to change their offer process and tell everyone the highest offer price.

 

Home Buyers Can Opt Out of Open Offers:

When potential Home Buyers submit an offer for purchase, they have the ability to insert a clause stating that they do not wish for the contents of their offer to be disclosed, even if there is an open offer process. This means even if the Property Seller decides to open the offer process to share the contents of the other offers, the contents of highest offer could still be kept confidential, ultimately giving that one Home Buyer the upper hand. There also may be the option for home buyers to retract their offers should the contents of offers be disclosed to other Home Buyers offering on the property.

 

Standard Items That Can Be Disclosed:

  1. Offer Price – The price of initial offers and subsequent offers.
  2. Conditions of the Offers – subject to Financing, Inspection, Sale of Buyers Home, Status Certificate, etc.
  3. Deposit of the Offer – The funds (often due within 24 hours) of the offer being accepted.
  4. Closing Date – The date that the buyer is willing to take title of the property.

The Property Seller may disclose additional items as long as it’s signed under form 209 – Seller Direction to Share Substance of Offers. The Property Seller does not have the ability to share any personal or confidential details about the Property Buyer. All items that have been agreed to be disclosed must be shared with all parties involved, the Property Seller is not allowed to pick and choose who to share the information with.

 

Preparing for the Changes as Home Buyers and Sellers:

As a prospective Home Buyer or seller in Ontario, it’s crucial to understand the nuances of these blind bidding changes. Here are some tips to navigate the transition effectively:

  1. Stay Informed: Keep abreast of updates regarding TRESA and any additional guidelines from regulatory authorities or ask your REALTOR to explain the details of these changes. Being well-informed will empower you to make the best decisions in this evolving landscape.
  2. Consult with Professionals: Engage with experienced real estate agents and legal professionals who can provide guidance tailored to your specific situation. They can help you understand the implications of the changes and navigate the process with confidence.
  3. Adjust Your Strategy: Buyers and sellers alike may need to adjust their strategies in response to the new regulations. Having a flexible approach will be key to navigating the real estate market effectively.

Conclusion:

The ability to disclose the offer contents provides with another way to deal with offers in Ontario, however, as discussed at this moment there isn’t much benefit for a Seller to have an open offer process. With home buyers also having the ability to not disclose their offers in an offer process, this can make the entire process confusing for many home buyers. Ultimately, as a home buyer in Ontario, I wouldn’t expect to wake up on December 1st, 2023 when the act is in effect, for you to be able to know the contents of competing offers when purchasing a home. If you have questions about TRESA or the Blind Bidding offer process, please reach out via the contact page or directly to Austin D. Titus – Realtor Broker at Century 21 in London Ontario by call or text at (519) 317-4460.

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Posted on November 21, 2023

Post Categories Home Buyers | Home Sellers

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