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I think that blind bidding is a bit of a scape-goat here: the problem isn't that the bidding process is blind per se, it's the complete lack of transparency. On

I think that blind bidding is a bit of a scape-goat here: the problem isn't that the bidding process is blind per se, it's the complete lack of transparency. Once a house is sold, the price that it sold for AND all bids should be made a matter of public record — accessible without having to pay a ridiculous amount of money to view. Not to mention the ridiculous commission fees for realtors, and their well-known practice of "steering" people away from homes with lower commission or prices. A practice that is technically illegal, but not enforced.

imposterr 5y ago
In some provinces, the sold data is at least available. It definitely helps get a feel for what one can expect to pay in a given neighborhood.
- richbell 5y ago
  While the sold data is useful, it doesn't capture nuances like "this house sold for 200k over asking and 175k over other bids because the buyer's agent mislead them and they were scared to lose." Often times a single large sale sets the bar for all future sales in the area; Zillow is a good example of how merely going off the sale history can quickly drive up prices.
slg 5y ago
>I think that blind bidding is a bit of a scape-goat here: Almost everything mentioned in the various comments here is a scapegoat. These all might contribute a little to the escalating prices at the margins, but they are not the root cause. The root cause is that many capitalist societies have decided that purchasing a house is the most expensive and important investment most people will make in their lifetime. Therefore these societies gradually shape their policies to ensuring these investments continue to increase or else there are widespread repercussions. The end result is we have collectively refused to build enough housing to keep prices stable or decreasing. The prices need to go up. I don't understand why no one is willing to admit this. All the other problems originate from this. The reason foreigners want to buy homes as speculation or a place to park their money is because governments are committed to ensuring that housing is a safe and profitable investment. It all comes back to us deciding that a basic human need should also be an investment that always is increasing in value.
- bennysomething 5y ago
  I think the root cause is supply, demand, the salaries of buyers, interest rates and multiple of salary for mortgages permitted by law.
  - katbyte 5y ago
    which are all influenced at every level by the desire (need?) to keep housing prices high and increasing..
  - slg 5y ago
    Those are downstream effects of the problem with housing being an investment. We don't want prices to go down so we don't build enough supply. The policies that make housing a good investment increase demand from speculators and investors above the natural need for housing. There are all sorts of subsidies that exist to give people more money to buy housing instead of trying to make housing actually cheaper. Interest rates are a lever the government uses to support its political goals which includes increasing housing values. It all comes back to the same root cause.
    - ipaddr 5y ago
      Where are you building these houses in the protected Oak Ridges Moran? Building requires space to begin with.
      - slg 5y ago
        Canada, famously a country with no free space. Even if the problem was a lack of space, building denser is always an option and none of the big Canadian cities are really overflowing due to population density.
        JacobThreeThree 5y ago
        You kid, but 90% of land in Canada is crown land. Nobody is allowed to own it.
Spooky23 5y ago
There's never a root reason. But because real estate agents are middlemen in the process, there's an incentive in a hot market to not act as an honest broker. When the market isn't "hot", a realtor has an interest to move quickly. When the market is hot, they have incentive to move their own listings so they get both sides of the commission. In my case circa 2005, I bid $50k over list via the broker who was managing my home sale. The selling broker "lost" the bid somehow and sold it for $20k over listing price. 7% of 20,000 is close to 3% of 50,000. But... I came to learn later that the selling agent targeted a particular religious community hard, and did a hard sell on insurance, inspection, and even attorneys to buyers, and frequently yielded another 3-5% based on "spiffs" from those providers. All of these inefficiencies and bad behavior add up and inflate prices.
- SOLAR_FIELDS 5y ago
  For the record dual agency is actually illegal in some places: https://www.homelight.com/blog/dual-agency-is-illegal-in-some-states/ https://www.homelight.com/blog/dual-agency-is-illegal-in-som... Though I will point out that in most of the jurisdictions in the link provided, there's nothing that prevents your scenario - a third party offer is turned down due to the dual agency bid being favored by the sellers because they never received your bid. Only in Colorado, Florida or Kansas is it explicitly prohibited. But at least if it was in one of the other states that requires disclosure (Alaska, Maryland, Texas, Vermont, Wyoming) the sellers would have at least been aware of a possible conflict of interest and may not have entered into a contract because of it.
  - Spooky23 5y ago
    Totally get that what the other guy did wasn't illegal in my state. The thing that bothers me is that as salespeople, real estate agents can deploy all sorts of fluffery and bamboozle people who believe their "agents" are acting in their interest. Of course the reality is that there is very little governing their conduct and behavior. Without a functional "exchange" or disclosure rules, both buyer and seller are dependent on good faith.
jackyinger 5y ago
The lack of transparency makes these deals ripe for fraud. I have heard anecdotes from people I trust of their realtor offering to generate a fake offer (by soliciting one from a third party) to drive up the escalation clause. Where there is money and little oversight there is bound to be fraud. It grinds my gears to think about this because I bought a house and the escalation clause went to the maximum. Now do you think that was purely coincidence?
- josho 5y ago
  If you have a good realtor they will confirm the competing offer exists. Eg. my realtor called up the selling realtor and asked for the name of the realtor that submitted a competing offer. My realtor called the competing realtor to confirm they had a client that submitted an offer. Yes, of course the two other realtors could conspire together. But, now instead of one dodgy realtor you have 2 and the probabilities go down further. Is there fraud, I'm sure there is. But, I don't think it's a significant factor in the market.
- Spivak 5y ago
  Escalation clauses are dumb anyway. If you tell me “I’m willing to pay you up to 100k for your house” then my offer just became $100k.
  - lotsofpulp 5y ago
    You can require proof of competing offers in your escalation clause.
    - charcircuit 5y ago
      Just get the realtor or some random person to bid $99,999.99
lupire 5y ago
Bidding is a total red herring. Bid what you value the property. Go low if you have patience. If you aren't the best bid, look somewhere else. Steering is a problem.
sokoloff 5y ago
Why should not selected bids be made public? If I bid $1.2M on a house 2 months ago and didn’t get it, I don’t want the seller of a house that I just bid $950K on to have access to a datapoint that strongly suggests I’m good for another $250K. In such a case, I’d predict a lot of partnerships (or whatever the lowest cost legal structure that isn’t traceable over time if not activated) would be bidding for houses. My bid as “123 Main St Partners” can be as public as you want I suppose.

imposterr 5y ago

In some provinces, the sold data is at least available. It definitely helps get a feel for what one can expect to pay in a given neighborhood.

richbell 5y ago
While the sold data is useful, it doesn't capture nuances like "this house sold for 200k over asking and 175k over other bids because the buyer's agent mislead them and they were scared to lose." Often times a single large sale sets the bar for all future sales in the area; Zillow is a good example of how merely going off the sale history can quickly drive up prices.

slg 5y ago

>I think that blind bidding is a bit of a scape-goat here: Almost everything mentioned in the various comments here is a scapegoat. These all might contribute a little to the escalating prices at the margins, but they are not the root cause. The root cause is that many capitalist societies have decided that purchasing a house is the most expensive and important investment most people will make in their lifetime. Therefore these societies gradually shape their policies to ensuring these investments continue to increase or else there are widespread repercussions. The end result is we have collectively refused to build enough housing to keep prices stable or decreasing. The prices need to go up. I don't understand why no one is willing to admit this. All the other problems originate from this. The reason foreigners want to buy homes as speculation or a place to park their money is because governments are committed to ensuring that housing is a safe and profitable investment. It all comes back to us deciding that a basic human need should also be an investment that always is increasing in value.

bennysomething 5y ago
I think the root cause is supply, demand, the salaries of buyers, interest rates and multiple of salary for mortgages permitted by law.
- katbyte 5y ago
  which are all influenced at every level by the desire (need?) to keep housing prices high and increasing..
- slg 5y ago
  Those are downstream effects of the problem with housing being an investment. We don't want prices to go down so we don't build enough supply. The policies that make housing a good investment increase demand from speculators and investors above the natural need for housing. There are all sorts of subsidies that exist to give people more money to buy housing instead of trying to make housing actually cheaper. Interest rates are a lever the government uses to support its political goals which includes increasing housing values. It all comes back to the same root cause.
  - ipaddr 5y ago
    Where are you building these houses in the protected Oak Ridges Moran? Building requires space to begin with.
    - slg 5y ago
      Canada, famously a country with no free space. Even if the problem was a lack of space, building denser is always an option and none of the big Canadian cities are really overflowing due to population density.
      - JacobThreeThree 5y ago
        You kid, but 90% of land in Canada is crown land. Nobody is allowed to own it.

Spooky23 5y ago

There's never a root reason. But because real estate agents are middlemen in the process, there's an incentive in a hot market to not act as an honest broker. When the market isn't "hot", a realtor has an interest to move quickly. When the market is hot, they have incentive to move their own listings so they get both sides of the commission. In my case circa 2005, I bid $50k over list via the broker who was managing my home sale. The selling broker "lost" the bid somehow and sold it for $20k over listing price. 7% of 20,000 is close to 3% of 50,000. But... I came to learn later that the selling agent targeted a particular religious community hard, and did a hard sell on insurance, inspection, and even attorneys to buyers, and frequently yielded another 3-5% based on "spiffs" from those providers. All of these inefficiencies and bad behavior add up and inflate prices.

SOLAR_FIELDS 5y ago
For the record dual agency is actually illegal in some places: https://www.homelight.com/blog/dual-agency-is-illegal-in-some-states/ https://www.homelight.com/blog/dual-agency-is-illegal-in-som... Though I will point out that in most of the jurisdictions in the link provided, there's nothing that prevents your scenario - a third party offer is turned down due to the dual agency bid being favored by the sellers because they never received your bid. Only in Colorado, Florida or Kansas is it explicitly prohibited. But at least if it was in one of the other states that requires disclosure (Alaska, Maryland, Texas, Vermont, Wyoming) the sellers would have at least been aware of a possible conflict of interest and may not have entered into a contract because of it.
- Spooky23 5y ago
  Totally get that what the other guy did wasn't illegal in my state. The thing that bothers me is that as salespeople, real estate agents can deploy all sorts of fluffery and bamboozle people who believe their "agents" are acting in their interest. Of course the reality is that there is very little governing their conduct and behavior. Without a functional "exchange" or disclosure rules, both buyer and seller are dependent on good faith.

jackyinger 5y ago

The lack of transparency makes these deals ripe for fraud. I have heard anecdotes from people I trust of their realtor offering to generate a fake offer (by soliciting one from a third party) to drive up the escalation clause. Where there is money and little oversight there is bound to be fraud. It grinds my gears to think about this because I bought a house and the escalation clause went to the maximum. Now do you think that was purely coincidence?

josho 5y ago
If you have a good realtor they will confirm the competing offer exists. Eg. my realtor called up the selling realtor and asked for the name of the realtor that submitted a competing offer. My realtor called the competing realtor to confirm they had a client that submitted an offer. Yes, of course the two other realtors could conspire together. But, now instead of one dodgy realtor you have 2 and the probabilities go down further. Is there fraud, I'm sure there is. But, I don't think it's a significant factor in the market.
Spivak 5y ago
Escalation clauses are dumb anyway. If you tell me “I’m willing to pay you up to 100k for your house” then my offer just became $100k.
- lotsofpulp 5y ago
  You can require proof of competing offers in your escalation clause.
  - charcircuit 5y ago
    Just get the realtor or some random person to bid $99,999.99

lupire 5y ago

Bidding is a total red herring. Bid what you value the property. Go low if you have patience. If you aren't the best bid, look somewhere else. Steering is a problem.

sokoloff 5y ago

Why should not selected bids be made public? If I bid $1.2M on a house 2 months ago and didn’t get it, I don’t want the seller of a house that I just bid $950K on to have access to a datapoint that strongly suggests I’m good for another $250K. In such a case, I’d predict a lot of partnerships (or whatever the lowest cost legal structure that isn’t traceable over time if not activated) would be bidding for houses. My bid as “123 Main St Partners” can be as public as you want I suppose.