In provinces across Canada right now, “blind biding” is the default practice when there are multiple offers on a home for sale. In essence, it means that potential buyers make their bids and compete to offer the most attractive offer without knowing the dollar amount of the bid they’re competing against.
However, a new pilot project and proposed regulation updates may change this.
The federal government announced plans to ban blind bidding in April of this year as part of the proposed 2022 Federal Budget, making it part of the promised Home Buyers’ Bill of Rights. The bill is not finalized and would still need to go through several approval stages before being implemented.
Other political parties, like the Green Party, also support the idea of banning blind bidding.
Just one day before the federal government’s proposed ban, the Canadian Real Estate Association announced a new pilot project to facilitate transparent bidding. Using real-time tracking, homebuyers can see all the offers on a property as they come in.
The full impact of this pilot project and possible ban on blind bidding remains to be seen if the proposal is approved. Analysts have differing predictions of what this will mean for buyers and sellers.
The argument for implement transparent bidding is that it will help cool down Canada’s hot real estate market. Bidders will have more information to make an offer and sellers will be able to give an “open offer” – they won’t be limited to selling their property through a closed or traditional system.
The counter argument, however, points to countries where a transparent system is in place – countries like Australia, Sweden and New Zealand. In these cases, evidence suggests that it may lead to higher house prices. However, there are other differences in these countries that may be causing the higher prices like home sales via live auction and bids that are not legally binding.
If the proposal passes, it will undoubtedly have an impact on both buyers and sellers one way or another.
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