The government of Canada is looking to implement a ban on blind bidding, but industry professionals aren't so sure it will ever come to fruition.
The proposed ban, announced earlier this month as part of the 2022 Federal Budget, would see an end to the blind bidding practices used across Canada's provinces and territories. The goal, the government says, is to increase transparency in the real estate purchasing process, limit buyers unnecessarily overpaying, and curb skyrocketing home prices.
But some in the real estate industry don't believe that the ban will, or should, happen. Vancouver Realtor Steve Saretsky says he's skeptical about the ban ever seeing the light of day, pointing to the fact that unlike other policies proposed in the budget, there's no specific timeline set out for its implementation.
"The blind bidding ban is never going to happen," Saretsky said. "Each housing market is provincially regulated so this has nothing to do with the federal government... And when you actually sit down and read through the budget, it's like, well, hold on a minute, the wording here is very vague."
In the budget, the government stated that over the next year, Minister of Housing and Diversity and Inclusion Ahmed Hussen will engage with provinces and territories to "bring forward a national plan to end blind bidding.” It did not present any further details or an anticipated date for the federal ban.
The Minister's office was unable to respond to requests for comment by the time of publication when asked for further details on the timeline, pending consultations, and evidence that blind bidding "ultimately drives up home prices," as the Liberal party has previously stated.
Katie Steinfeld, broker of record for On The Block Realty, has experience selling in both blind and open bidding formats, with her brokerage running traditional home sales as well as live auctions. Having experienced both types of sales, Steinfeld believes it's best to continue giving clients a choice
"At the core of it, I think it just doesn't make sense to force consumers to sell their home in one way or another," Steinfeld said.
The blind bidding ban, Steinfeld believes, isn't going to accomplish what the government hopes it will -- lower prices.
"I don't think it's fair and doesn't really get to the core of I think what they're trying to get at in terms of the pricing issue," Steinfeld said. "We've definitely seen with quite a few of our auctions that when people see the number and they know they just have to go up to the next increment, they just do because they know for sure that they could be in the lead, and that comes with that is a lot of emotion and that takes over for a lot of people. So we have seen a lot of our auctions go much higher than we ever would have expected."
Steinfeld's experience is backed up by data from a report from policy think tank Smart Prosperity Institute. The report states that evidence from countries like Sweden, New Zealand, and Australia suggests open bidding will lead to higher prices. All of Australia’s home sales, as well as a large portion of New Zealand’s, are carried out via a live auction.
Rather than focusing on whether bids are blind or open, Steinfeld says that the best way for the government to increase transparency and help consumers better navigate the home buying process is by targetting intentionally underpriced homes.
"I think it causes a lot of confusion in the market, just in terms of, you know, a home is priced at $799,000, but it's really worth $1.5M," Steinfeld said. "I think that's really unfair for consumers to have to try to navigate through all of that and understand exactly what it is that a seller expects for their home. We've looked to other markets like New South Wales, Australia, and they've actually got rules around underpricing. So, to me, I would be interested to see how we could potentially look at putting rules around that aspect of the real estate listing process."
But not all real estate professionals see the blind bidding ban as a far-off fantasy. In fact, Toronto-based real estate agent Shane Little points to the Ontario Real Estate Association's requirement for listing agents to report the number of offers -- a policy implemented in 2015 -- as a good precedent for open bidding.
"I think the best thing to do would be to just do that but also include the price," Little said. "I think what that would do is it would stop people from negotiating against themselves and improving their offer, even if, for example, they're $75,000 higher than the second place. They don't know that because it's blind right now, so I think that it would help keep some downward pressure on price and it would make would make sure that things sell for what they should."
Neither Little nor Steinfeld see a shift in Canada's entire selling format to a live auction style as either necessary or viable.
"I think that that's a bit radical," Little said. "I think that would be a huge overhaul of the way we do things and it would be more difficult."
Steinfeld pointed to the complexities she dealt with setting up the auctions at her brokerage, underlining how much more difficult it would be to carry that out country-wide.
"What we know from the way we created our own auction platform is that there was a lot of thought that had to go into it and a lot of little modifications along the way as we did auctions," Steinfeld said. "My fear is that you just open it up and allow people to do it. Well, how does that look? What are the rules? How are you going to make it fair for everybody? Because a lot of people can can take advantage of certain situations, you want to make sure that you've got all of your bases covered before just opening it up and forcing people into this way of selling."
