Late last year, changes to Ontario’s real estate legislation, the Trust in Real Estate Services Act (TRESA), came into effect, making open bidding legal in Ontario. (Real estate is generally regulated at a provincial level, so as of now, these changes only apply to Ontario.) It was big news at the time, but has it made a big impact? Here’s what this legislation means for buyers and sellers in the province, and how it could influence the housing market.
What is open bidding in real estate?
Open bidding in real estate is when the details of all registered offers on a property are shared openly between prospective buyers. This means that if four different offers are registered on a house, the four potential buyers can see the specifics of each competitor’s offer, including the purchase price, deposit, closing date and other terms. The name of each person making an offer is withheld, and if the purchase is contingent on the sale of another property, that information is also confidential.
Unlike a closed bidding process—often referred to as blind bidding—open bidding allows each prospective buyer to know exactly how their offer compares to the competition. It also means that they can adjust their offer based on this information (within a given timeframe). Open bidding eliminates a lot of the guesswork in making an offer on a home, and it’s intended to maximize transparency between buyers and sellers.
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What impact has open bidding had on Ontario’s housing market?
In 2022, the federal government announced that it would be implementing a Home Buyers’ Bill of Rights. One of the goals of the bill was to make housing more affordable by putting an end to blind bidding, and it appears to have influenced the changes to the TRESA. However, blind bidding has not been banned in Ontario or anywhere else in Canada at this time. Because this new legislation makes open bidding optional, not mandatory, blind bidding is still commonplace in Ontario.
“Open bidding brings more visibility to the buying process,” says Doug Vukasovic, a realtor in Toronto. That said, he isn’t seeing open bidding being used broadly yet: he’s only represented one buyer in an open bidding process, and so far none of his listing clients have opted to use open bidding. “It’s not something people are gravitating towards.”
Based on what he’s seeing in Toronto, Vukasovic doesn’t think that open bidding will have an impact on real estate prices. Changes in the market will come from interest rates, he says, noting that after a slight cool-down in some regions, the demand for houses should gradually increase as mortgage lending costs continue to ease. In other words, affordability is the bigger factor. “We need lower interest rates for people to be comfortable placing an offer,” he says.
How can sellers decide if open bidding is right for them?
Once you share the details of your listing with prospective buyers, there’s no going back—but you can change the bidding process from closed to open relatively easily. “At any point during the bidding war process, a seller can change from closed to open bids,” Vukasovic explains. “They just need to give written consent to the agent” and disclose the change to buyers.
It rarely benefits a seller to start with open bidding, Vukasovic says, but it can be helpful once several bids have been registered on the property. For example, if the top three offers on a million-dollar-plus home are within $20,000 of each other, a seller can open up the bidding process to encourage each of those prospective buyers to put in their best and final offer. In this situation, the buyers benefit from greater price transparency, and the seller wins if one of the bidders decides to increase their offer.
However, when the top two offers on a property are farther apart—say, by $100,000 or more—it’s unlikely that the seller would want prospective buyers to know that through open bidding, as the higher bidder might pull their offer to avoid overpaying for the property. This scenario is far less common than the one described above. “Someone’s got to stick their neck out a little, but paying hundreds of thousands over [the next best offer] is rare,” Vukasovic says.
