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Ontario real estate law update with open bidding option enters into force

Ontario's real estate landscape is set for a transformation with the implementation of new rules that aim to provide greater clarity and flexibility for buyers and sellers. These rules, effective as of last Friday, introduce several changes, including the introduction of an open bidding option, enhancements to broker and brokerage disclosures, and measures to prevent conflicts arising from multiple representation.

One of the key features of the new rules is the option for sellers to utilize an open bidding process. This allows sellers to disclose the prices of submitted bids to potential buyers, a practice previously prohibited. Advocates of open bidding, including Ontario Green Party leader Mike Schreiner, believe that a consistently transparent bidding process will contribute to curbing rampant overbidding in the real estate market and ultimately help stabilize prices.

Schreiner remarked, "A consistently transparent bidding process will help bring down the skyrocketing price of houses." The move aligns with promises made by the federal Liberals during their 2021 election campaign to end blind bidding, as they argued that not knowing other bids contributes to driving up home prices.

Joseph Richer, registrar at the Real Estate Council of Ontario, acknowledged the potential impact of blind bidding on prices but emphasized the lack of comprehensive research on the subject. He cautioned that mandating open bidding could have negative consequences for sellers, emphasizing that making it optional provides more flexibility.

"Keep in mind that in every transaction, there's a buyer and a seller, and that whatever you mandate for one might be, and probably is, at the detriment of the other," Richer noted. He added that while the open bidding option may not appeal to most sellers in the current market, it provides additional choices.

Sellers facing challenges in finding buyers might consider allowing their agents to disclose bids to attract more potential buyers. While the option may not be immediately embraced by all sellers, real estate agents are expected to explore new business models to take advantage of the possibilities it presents.

Randy Oickle, president of Innovation Realty Ltd. in Kanata, Ont., sees the changes in the act as quite significant. However, he expressed a desire for a framework for using open bidding to address potential challenges.

Other notable changes include the ability for buyers and sellers to choose a designated representative, allowing them to free themselves from multiple representation scenarios. Previously, if the buyer and sellers' agents worked at the same brokerage, they fell under a multiple representation scenario, limiting the agents' ability to advise clients.

The updates, considered Phase 2 of changes under the act, also encompass an amended code of ethics, new enforcement tools for the Real Estate Council of Ontario, and an information guide that prospective clients are to receive before agreeing to have an agent represent them.

While the federal promise of open bidding continues to progress, Housing Minister spokesperson Micaal Ahmed highlighted that real estate falls under provincial and territorial jurisdictions. The federal government is actively consulting with stakeholders to develop a home buyers' bill of rights, nearing completion of this comprehensive initiative.



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