New real estate legislation for B.C. this spring
Review of blind-bidding in B.C. real estate market to look at rules elsewhere
Jaonne Lee-Young
The Province
B.C.’s Ministry of Finance is studying options for legislation on real estate sales that it plans to introduce next spring. Photo by Gerry Kahrmann /PNG
The provincial government is expected to study other real estate markets and their bidding practices — such as blind-bidding and automatic step-up clauses — before presenting new real estate legislation for B.C. this spring.
The Ministry of Finance said it will ask market and consumer experts to consider alternatives and how bidding practices work elsewhere.
During the federal election campaign, the governing Liberals talked about implementing a national ban on blind-bidding, whereby home sellers would have to tell buyers exactly what dollar amount competing offers were willing to pay, and the requirement would be tied to an amendment to the Criminal Code.
But the talk has given way to a realization that real estate regulation ultimately falls under the oversight of provinces and territories, which already have slightly different approaches.
On the possibility of changes to blind-bidding, the B.C. Ministry of Finance said it understands “people’s concerns about the process. It’s also important to note that it is a long-standing practice that is used across Canada.”
Critics of banning blind-bidding point to privacy issues and concerns that greater transparency in very hot markets can actually fuel “the fear of missing out” that drives up sales prices.
The ministry didn’t specify, but one difference it could consider might be how home buyers in B.C. rely solely on the seller’s agent’s willingness to reveal on how many other offers there are. In Ontario, brokerages are required to let other buyers know the number of competing written offers.
“Whenever you’re in a multiple-offer situation, that is the one thing that I am allowed and should be telling people is how many offers they’re up against so at least they know that,” said Brendan Powell, a Toronto real estate agent. “There’s no formal process for that registration, but it is a process that we’re obligated to follow. People have a right to know how many offers they’re up against.”
The number of other bids is one indication of demand, but Powell also said it can have its limits in a hotter market.
“Back in the day, let’s say five or six or 10 years ago, we used to have a rule of thumb of how may offers equals how much it was going to go over asking price, but that’s out the window now,” he said. “We used to joke that every offer means another 10 grand over asking, but it’s been some years since that’s even close to relevant anymore. The only time it’s really helpful (to know the number of other bids) is when you’re the only offer or if there is one other offer.”
Still, he said, “if I know there’s only one other offer, or no other offers, that would very well change the number that I have my buyer willing to pay, versus if there are 15 other offers. If it’s 15, you damn well better put your best foot forward.”
Another option is the use of an “automatic step-up clause,” a mechanism found on most online auction sites that allows for bidding in set increments. Buyers would still submit their maximum bid, but the winning bid would just beat out the next highest bid by a reasonable, set amount rather than a very wide margin.
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