New rules for real estate in Ontario are in effect and are meant to provide more clarity and choice for buyers and sellers, but not as much as some people had hoped.
The rules, which went into effect on Friday, include options for sellers to use an open bidding process, improved disclosures for brokers and intermediaries, and ways to avoid multiple agency disputes.
The open bid option gives sellers the option to disclose submitted bid prices to potential buyers, which was previously prohibited.
Public bidding has been advocated by some, including Ontario Green Party Leader Mike Schreiner, as a way to reduce overbidding and drive down prices that are rampant in the real estate industry.
“A consistent and transparent bidding process will help reduce home price inflation,” he said when the Ontario government announced that open bidding would be an option for sellers.
The federal Liberal Party also pledged to end blind bidding in the 2021 election campaign, saying that not knowing about other bids would ultimately drive up house prices.
But Joseph Richer, registrar of the Real Estate Council of Ontario, said there is little research into how blind bidding affects prices, and there are no signs that public auctions in Australia are putting upward pressure on prices. He added that there are several.
He also said mandatory public bidding could have a negative impact on sellers.
“Keep in mind that in any transaction there is a buyer and a seller, and what you order one to do can and probably will be to the detriment of the other. .”
Making this optional gives sellers more options, Richer said.
“We don’t expect big market movements. Some deals may help some parties.”
As an example, he noted that sellers who are having trouble finding buyers may want to allow agents to disclose bids to help attract more buyers.
Randy Oichle, president of Innovation Realty in Kanata, Ont., said the option may not be very attractive to most sellers in the current market, but real estate agents will find some use for it. Told.
“We are likely to see some new business models emerge that seek to take advantage of the new possibilities.”
He said he would have liked to see some rules regarding the process for using public tenders.
“I think the fact that there’s no such thing as a framework to use it potentially creates challenges.”
Oykul said that overall, he sees the changes in the law as very important.
Other notable parts of this law include the ability to select a designated representative.
Previously, if the buyer’s and seller’s agents worked for the same brokerage, it was considered a multiple agency scenario due to potential conflicts of interest. In such cases, agents generally acted only as intermediaries and were limited in their ability to advise clients, such as what the appropriate price was.
By designating a specific agent, buyers and sellers will be freed from multiple agents under the new rules and agents will be able to advocate more aggressively on their behalf, Richer said.
“This means that if I hire you, you are free to continue to advocate for me and provide all of your services and experience on my behalf, which is prohibited under multiple representation. That’s what happened.”
The update, the second phase of changes under the law, includes a revised Code of Ethics, new enforcement tools for RECO, and the agency that prospective clients should receive before agreeing to be represented by an agent. Also includes an information guide from
Regarding the federal government’s commitment to open tendering, Housing Minister Spokesperson Mikal Ahmed said that since real estate generally falls under the jurisdiction of states and territories, the federal government has a vested interest in creating a homebuyer’s bill of rights. He said he is continuing to hold discussions with the parties.
Work is progressing well and nearing completion, he said.
This report by The Canadian Press was first published Dec. 1, 2023.