The ‘Policy of the Year’ is part of STOREYS annual week-long editorial series. You can find the rest of our 2023 selections here.
For better or for worse, 2023 has been a year of big changes for Ontario's real estate industry. From changes in the market (like slower sales and fewer new units launching) to new regulatory policy, the ability to adapt has been more critical than ever.
But there's one policy change that, after many years of discussion all across Canada, seems to finally be on the precipice of playing out in Ontario: the allowance of open offers.
It's a long-talked-about initiative that really picked up steam in 2022 as home prices surged, with buyers often paying hundreds of thousands of dollars over the asking price with no real concept of how close (or far away) they were to the next highest offer. In the Greater Toronto Area especially, there were homes frequently selling in just a matter of days — if not in a single day — with dozens of bids offering seemingly more and more ridiculous prices. Many would-be buyers felt hopeless after being continually priced out.
In response, government at all levels began advocating for increased transparency, effectively calling for an end to the standard practice of blind bidding where details about competing offers are kept hidden from other interested buyers.
Allowances regarding what information can be shared vary from province to province, as the real estate industry is regulated provincially. Under former Ontario regulations, real estate agents were required to share the number of bids, but were prohibited from sharing details of those competing offers.
By April of last year, the Ontario government brought forward new regulations, set to take effect in 2023, that would allow home buyers to see all competing offer prices, but with the way it was proposed, it didn't guarantee any openness. Competing prices weren't required to be shared; they would only be shared if the seller agrees to it.
The Ontario government's announcement came less than two weeks after the federal government included a plan to ban blind bidding nation-wide in its 2022 federal budget. The federal plans, though, were rather vague, with the budget simply stating 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.
But, whether federal or provincial, the motivating idea behind the shift to end blind bidding was the same: by allowing buyers to see competing offers, they won't be left having to guess how much they need to offer to make sure they snag the sale, which would in turn prevent overpaying for homes.
The plans, however, received mixed reviews. Tim Hudak, CEO of the Ontario Real Estate Association, expressed his support at the time, saying that they "strike the right balance between adding more transparency to the offer process and protecting a homeowner’s right to sell their home how they want." Others, like Green Party of Ontario Leader Mike Schreiner, said that simply offering the option of open bidding wasn't enough, as sellers will likely continue to withhold that information when given the choice.
Some skeptics pointed to a report from policy think tank Smart Prosperity Institute that found evidence from countries like Sweden, New Zealand, and Australia suggesting open bidding will not only not bring down prices, but would lead to higher prices. (Notably, Australia’s home sales, as well as a large portion of New Zealand’s, are carried out via a live auction, which is not the case in Canada.) Some believe these pricier sales are a result of would-be buyers being able to see the prices, offering just a little bit more, and staying in the bidding game longer than if they were simply told they were outbid and chose to walk away.
Despite these uncertainties, the push for open offers continued on, and in March of this year, the Canadian Real Estate Association (CREA) launched an open offers platform across Canada on Realtor.ca — well, in theory. In actuality, it couldn't be done in every province due to some restrictive regulations. But for provinces with looser rules than Ontario (as the proposed changes to allow more transparent offers had not come into effect yet) the option to add real-time offer tracking on a listing's Realtor.ca page was put on offer, with various levels of transparency available depending on the seller's preferences.
This open offer system, brought about via a partnership with Australian property technology company Openn, although initially presented as a free feature to help increase transparency, is expected to start charging fees to realtors, a STOREYS investigation revealed.
It took Ontario virtually the rest of the year — until December 1 — to actually implement the changes that would allow for open offers. The beginning of the month saw a new phase of the Trust in Real Estate Services Act (TRESA) come into effect, bringing with it a whole host of changes for Ontario's real estate professionals.
TRESA, introduced by the provincial government in November, replaced the previous Real Estate and Business Brokers Act. Although it brought with it substantial changes like stiffer penalties for rule-breaking realtors and stronger powers for the Real Estate Council of Ontario, the change that garnered the most attention was the allowance of open offers. Under TRESA, if given permission by their sellers, realtors are allowed to share the details of competing offers with other buyers, though any personal or identifying information will be withheld. Additionally, sellers are able to choose how much information is shared, and can change their minds at any time.
Now, with the option to allow open bids out there, and an outright ban on blind bidding seemingly not coming to fruition, the question remains whether any sellers will actually opt use it.
Eric Bryant, Openn's Director of Operations for North America, previously told STOREYS that although sellers are given the option to use various levels of transparency, he expects that as time goes on and buyers become more and more interested in increased transparency, there will be an uptick in usage.
"I can almost promise you that two years after we start using the product, you're going to see a move to full transparency because, ultimately, the consumer is going to let the professional know exactly what they want and they're going to go find it just like they went and found Ubers over taxis and just like they went to Amazon over Barnes and Noble," Bryant said at the time.
Openn has been eyeing partnerships with local boards to provide them with a product similar to what's being offered through Realtor.ca, saying in the spring that they were in early stage discussions. At Openn's annual general meeting in November, it welcomed the implementation of TRESA, noting that "Openn is exceptionally well-positioned to assist agents in compliance."
The change to allow open offers is one that could be big for the industry, but it will be entirely up to the market to dictate how and when it's used. Whether prices end up being shared privately between sellers and would-be buyers or posted publicly on a listing's Realtor.ca page, and whether the number of homes that get overbid on comes down all remains to be seen. With Ontario home to the largest share of the country's real estate transactions, all eyes will be on the province to see how (and even if) the use of open offers plays out.
