Ontario’s soaring cottage real estate prices may finally see some friction. The province’s Ministry of Government and Consumer Services is rolling out new regulations that will allow people selling their properties to disclose the details of competing offers.
Currently, the Trust in Real Estate Services Act, 2020 (TRESA), forces buyers in a multi-offer scenario to submit a bid without knowing how much competitors are offering, otherwise known as blind bidding. This practice forces buyers to guess what they should offer; in some cases paying thousands of dollars more than the next highest bid.
Over the last two years, multi-offer scenarios have become common in cottage country fueled by high demand being driven by low mortgage rates and an urban exodus during the pandemic. The new TRESA regulations give sellers the option to opt-in for an “open-offer” process, disclosing details of competing bids.
“Sellers will no longer be limited to selling their property through a closed or traditional offer system,” said minister of government and consumer services, Ross Romano, in a statement.
Ontario Real Estate Association (OREA) CEO, Tim Hudak, voiced his approval of the new regulations, saying in a statement that it will make the buying process more transparent while giving homeowners a choice of how they want to sell their properties.
Some critics, however, are saying that by empowering the sellers with the choice to disclose offer details, the new regulations will do little to curb prices. “Home sellers shouldn’t be able to pick and choose when the bidding process is transparent and when it is blind. That defeats the purpose of ending blind bidding since it’s in sellers’ best interest to keep buyers in the dark,” said Ontario’s Green Party leader Mike Schreiner in a statement.
“A consistently transparent bidding process will help bring down the skyrocketing price of houses, and along with other key policies, like expanding zoning and investing in affordable rentals, will help us build an Ontario where everyone has an affordable place to call home.”
The Ontario government announced its “open-offer” alternative just a few weeks after the federal government released its 2022 Budget, which tasked minister of housing, Ahmed Hussen, with creating a Home Buyers’ Bill of Rights. As part of the bill of rights, Hussen will work with each province and territory to end blind bidding and make housing more affordable. It’s uncertain whether Ontario’s new TRESA regulations will meet the bill of rights’ requirements.
The new TRESA regulations are set to take effect on April 1, 2023. On top of providing the “open-offer” alternative to blind bidding, the government is also introducing a new code of ethics for real estate brokerages, brokers, and salespersons, improving professionalism and disclosure obligations.
As part of this process, the Real Estate Council of Ontario (RECO), which is in charge of regulating real estate professionals on behalf of the provincial government, will provide buyers and sellers with a fact-based information guide detailing their rights and options. The government is also expanding RECO’s disciplinary scope to encompass all aspects of the TRESA.
“By giving RECO these powers, we’re streamlining and speeding up the process needed to resolve issues and ensure real consequences for those acting in bad faith,” Romano said.