People in Ontario aren't buying new regulations for bidding wars on homes
Amid Ontario's sickening real estate market, bidding wars are par the course for anyone who wants to get their hands on a coveted, vastly overpriced piece of property to call their own.
Even way outside Toronto, the trend is out of control, with Ottawa, Whitby, Windsor, Oshawa and Ajax topping the list of the hottest cities for bidding wars, driving already unconscionable housing costs even higher as prospective homeowners vie for their dream shoebox in a highrise or old-ass bungalow in the province's armpit while supply remains tight.
Even rental units are seeing stiff competition again, with tenants offering more money per month than asking or more months of rent up-front to secure a place.
That’s nothing. I’m Toronto Canada houses listed at $1.1M are going for $1.45m within 24 hours, no conditions allowed, bidding wars. Can’t even get a home inspection to see if your spending your life savings on a lemon.— CommodityMatters (@CmmodityMatters) April 18, 2022
In an effort to help curb this phenomenon, the province of Ontario is bringing in a new regulation to offer buyers more transparency about what other offers are on the table.
Up until now, they had to rely only on their realtor's best estimate and advice on what other parties might be offering, and what amount might beat them out.
Unfortunately, the measure is set to be completely optional for sellers — and they can pick and choose which details they want to share, too — which many rightfully seem to think is complete bullshit.
As one commenter in a popular Reddit thread on the topic points out, the rule is essentially "useless" with no incentive for a seller to share these details. "What seller would do that?," they write."They stand to make more money with blind offers."
Exactly— Canadian Loon 🦆 (@BambinoJalapeno) April 19, 2022
Others feel that it could actually make things worse, as sharing neck-and-neck bids, likely the only situation in which a seller would choose to disclose such info, could just serve to just drive average prices higher as people keep throwing down more to outprice one another.
There is also the potential for higher list prices to start, as sellers currently sometimes choose list low to incite a flurry of offers.
It’s going to make sellers put a higher price point on and watch the buyers scrap it out. Might artificially inflate prices.— Canada1 (@Banger7724) April 19, 2022
Hundreds are now calling for full, mandatory transparency rather than this "half-assed" version, especially with the market being what it is, though it is unclear whether blind bidding wars or open ones are worse for overall price inflation.
Others are unsure it even matters given the current landscape of real estate in the province, even in the off chance that sellers do end up choosing to be more open.
"People are buying homes regularly the day after their first viewing, with no inspection done, and at hundreds of thousands of dollars over asking," one Redditor adds. "What in the world makes you think there will be many buyers holding out to see the other bids?"
Or at least have a set fee. Blind bidding and ridiculous overpaying for homes benefits the realtors. Does a realtor who sells a $1.5 M home really work 2x harder than one that sells a $750 K home?— Beachlover 🌻🇨🇦 (@BeachLFireFord) April 19, 2022
Some have other, better solutions in mind, whether it be getting rid of realtor commissions and instead instating a set fee, or nixing realtors altogether for an auction model.
Regardless of what citizens think should happen, most don't appear confident that this new development will change anything for the better.
Two rules would change the game;— Guy (@guy369) April 19, 2022
1. End blind bidding
2. Any $ above the sale price is commission free for the seller.
The new amendment, among others under the Trust in Real Estate Act, is slated for implementation in April 2023.
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