Open Bidding Option Enters Into Force: Ontario’s New Real Estate Law

New regulations for real estate in Ontario are being implemented to enhance clarity and options for both buyers and sellers, though they fall short of some people’s expectations.

The newly effective rules, initiated on Friday, encompass provisions such as the introduction of an open bidding process, enhancements to disclosures by brokers and brokerages, and measures to prevent conflicts arising from multiple representation.

The open bidding alternative empowers sellers to reveal bid prices to potential buyers, a practice prohibited in the past. Advocates for open bidding, including Ontario Green Party leader Mike Schreiner, believe it can mitigate excessive overbidding in the real estate market and contribute to price reduction.

Schreiner expressed his support for the initiative, stating, “A consistently transparent bidding process will help bring down the skyrocketing price of houses,” when the Ontario government announced the inclusion of open bidding for sellers.

The federal Liberals, in their 2021 election campaign, also pledged to eliminate blind bidding, asserting that the lack of information about other bids ultimately leads to inflated home prices.

Previously, if both the buyer and seller agents operated within the same brokerage, potential conflicts of interest could arise, resulting in a multiple representation scenario. In such instances, agents were generally limited to a facilitating role, with restrictions on providing extensive advice to clients, including guidance on determining a fair price.

The updates, constituting Phase 2 of changes under the act, additionally involve modifications to the code of ethics, the introduction of new enforcement tools for the Real Estate Council of Ontario (RECO), and a guide from the agency that prospective clients must receive before engaging an agent’s representation.

Parvasi Media Group