Closed bidding could be costing homebuyers money and opportunity for inspections, advocates say
Province looking into how bidding impacts real estate market and buyer protection
Some stakeholders are calling for an end to non-transparent bidding in real estate transactions, worrying it creates an unfair market for homebuyers.
Non-transparent bidding, also referred to as closed bidding or "blind bidding," is the practice of putting an offer in on a home without knowledge of what others have bid. It typically only happens during sellers' markets when a home attracts multiple offers.
Last year, the province said it would be looking into ways to protect homebuyers in B.C.'s increasingly hot real estate market. The B.C. Financial Services Authority was asked to consult with stakeholders and look into this process of closed bidding.
A poll commissioned by CBC last year, conducted between Sept. 17 and 19 using Leger's online panel, revealed that the majority of Canadians supported an end to this kind of bidding; about 52 per cent of the 1,511 survey respondents supported the elimination of closed bidding, while 23 per cent wanted things to stay the same and 25 per cent weren't sure.
West Vancouver realtor Christy Laniado said she "completely disagrees" with closed bidding.
She recently had a client make an offer on a condo, about $1,000 over asking price. There was only one other person bidding on the property, and that individual bid $50,000 higher. Laniado said this is problematic because that buyer could have saved thousands of dollars if they'd known Laniado's client's bid.
"My buyer and I felt so bad for the other buyer knowing she spent that much money and she didn't need to," Laniado said.
"I do think there has to be an ethical aspect to it, and I think being transparent about offers is the way to do it," she said.
Michael Geller, a real estate consultant in Vancouver, describes the system as "very unfair."
He said that buyers, after several unsuccessful bids, start making higher and higher offers, often without subjects or inspections, so they can just buy a home.
"I would like to suggest to all the realtors out there and the real estate association, why don't you voluntarily agree that you're going to stop the blind bidding process? Maybe I'm being Pollyanna-ish, but that, to my mind, would address a lot of the problems," he said.
The B.C. Real Estate Association (BCREA) has come out against restricting this type of bidding.
The association worries that imposing an open bidding system could discourage buyers and sellers from using a professional realtor, leaving them unrepresented. It said it could also place more emphasis on the price of an offer as opposed to other potential considerations.
Instead of restricting blind bidding, the BCREA says it recommends greater transparency on how many other offers have been made so buyers can make more informed decisions.
With files from BC Today and Tiffany Foxcroft
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