On December 1, the province brought in the Trust in Real Estate Service Act (TRESA), updating the rules that govern real estate professionals in Ontario. I won't go through all the changes here: you can check this STOREYS article, or RECO’s new guide to working with an agent for greater detail. In this article, I’ll look at the biggest changes, and what kind of an impact I believe they'll have on buyers, sellers, real estate agents, and the market in general.
Change #1: A New Open Offer Process
The old blind bidding process is no longer the exclusive method for selling a property: sellers now have another option, where they can share information about competing offers. It's a move designed to increase transparency and prevent huge price jumps. But while the sentiment behind the change is an admirable one, there's one thing that takes the teeth out of it: revealing this information is 100% up to the seller. So, if a seller wants to play buyers against each other in a blind bidding war, they still can. In most cases, not being transparent could be in a seller’s best interest.
However, there are situations where it will make sense to share, depending on market conditions. Open offers could attract buyers who might otherwise stay away from a listing in a hot neighborhood. And it could actually result in a higher price, as buyers see exactly what they're up against and stay in the game rather than walking away.
READ: What Should Sellers Do In This Market? An Expert Explains
A similar system in Australia hasn't brought down prices. I don't think open offers will make a difference in property prices here, either. Demand is demand, whether you can see what other people are offering or not. We could see a bigger difference when the market goes back to being hot: buyers will be able to see that you only have to offer $50K to win, not $500K. But that’s when sellers will be more likely to opt out of an open process.
Navigating this new system is going to take some figuring out. There are a lot of moving parts to open offers. Sellers can decide how much they want to share. But buyers may want a say too: we’re already seeing confidentiality clauses that prevent sellers from disclosing. And if sellers decide they want to switch to blind bidding, they can. It’s a situation that has the potential to get complicated and will require the expert guidance of an agent.
There are some great new platforms out there that help manage all these moving parts, like Openn out of Australia. These apps are much needed: with 5 or 10 offers, managing what gets disclosed — and to who — is a lot to juggle. Things are changing all the time as we figure out how to actually put these regulations into practice. I don't think anyone can definitively say whether this will work or not anytime soon.
VERDICT: the jury is still out.
Change #2: A Clearly Defined Client-Agent Relationship
The old regulations differentiated between a customer and a client: a client got full fiduciary duties and responsibilities, while a customer got access to limited information and no fiduciary support (like advice on how much to offer). That all got a little murky, so RECO has done away with the whole customer category. Now you're either a client who gets the full services of your agent or you're not. There's no grey area.
So what happens in a situation where you go to an open house, meet the listing agent and want to make an offer without engaging your own realtor? In this case, you’re a “self-represented party.” The agent can give you information about the property, but that’s it. They can’t offer you services, opinions or advice and will only work in the interest of their client. There's no conflict of interest here, just clarity.
VERDICT: good.
Change #3: RECO Has Been Given More Clout
TRESA has given the Real Estate Council of Ontario (the regulatory body that oversees real estate professionals in the province) more power to enforce the rules. They have revised the code of ethics, focusing on integrity, confidentiality, conflicts of interest, and fraud prevention. They now have greater ability to administer fines, revoke licenses for misconduct, hold brokerages and their agents accountable for non-compliance, and provide consumers with added protection.
VERDICT: excellent.
The changes are positive, but there's work ahead.
It's going to take us all time to figure out how TRESA will work in practice. Right at Home and Property.ca have a TRESA Learning Task Force, which is helping our agents hit the ground running. RECO, OREA and the real estate boards have all shared learning materials. We've engaged subject matter experts to come in and talk to us. Our professional development team has put together presentations for our salespeople, we've shared lots of online information, and our managers and branch administrators are fully up to date on the rules.
Overall, I'd say TRESA is taking our industry in the right direction. I look forward to greater transparency, clearer rules – and a better experience for clients and agents alike.
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This article was produced in partnership with STOREYS Custom Studio.
