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I'm a homeowner in Toronto and I don't think this will help. They've eliminated a small number of buyers from the market but have added other incentives like a

by pards 4y ago

I'm a homeowner in Toronto and I don't think this will help. They've eliminated a small number of buyers from the market but have added other incentives like a first home buyers tax credit that will only fuel the fire - Australia tried this with tragic results. >> working with provinces and territories to develop and implement a Home Buyers’ Bill of Rights and bring forward a national plan to end blind bidding. Blind bidding is where multiple parties submit a sealed bid on a property. The realtor and seller review these bids behind close doors and then often request subsequent rounds of bids from the bidders *without telling them the current winning bid, or who's bid is winning*. Bidders end up out-bidding themselves. IMHO blind bidding is an unethical practice that should be outlawed regardless of its impact on housing prices.

hallway_monitor 4y ago
I saw an Australian sitcom where the house went up for auction. It was a proper live auction where everyone showed up to bid on the house. I was flabbergasted as I had no idea things were done in any other way than blind bidding as that is how it is always done here in the US.
- stevesimmons 4y ago
  In Melbourne, this is totally normal. Everyone stands in the street, prospective buyers, neighbours, and people starting their house search. The estate agent stands on the front step, acting as the auctioneer, using the rolled up "Section 32" document like a gavel. Typically the auctioneer draws out bids in $10-20k increments, then knocks it down with a "going once, going twice, going three times..." call. Just before declaring it sold, the agent normally stops, goes inside to consult with the vendor, and if the price is above their reserve price, goes back outside and says "the house is now on the market". Now the auction gets serious... Usually another couple of bidders reveal themselves at this stage. The increments can drop to $1k. If there is a battle between the last two or three bidders, the final price can go up another $50-100k or so. Eventually the final bid is locked in with a final call of "going once, going twice, going three times, to the man in the blue shirt." The winning bidder goes inside with the estate agent, hands over a cheque for 10% of the purchase price, signs the contract part of the Section 32 statement, and is then committed to pay the balance in 60 or 90 days. Sales almost never fall through. If the buyer cannot get financing etc, the seller keeps their 10% deposit. The seller cannot back out. I bought my house like this, and sold it again 20 years later the same way. It's a totally predictable, well regulated, very transparent process. The weekend auction results are all published on Monday morning, both for every house, and the aggregate "clearance rates" for sold versus "passed in". This is so unlike UK, where each sale has a chain of buyers, all "subject to finance", and no certainty or speed!
  - bitshiftfaced 4y ago
    > Sales almost never fall through. If the buyer cannot get financing etc, the seller keeps their 10% deposit. The seller cannot back out. In the states, once the purchase agreement is signed, the home goes through inspection at some point before the sale. The inspector finds a hundred little problems with the house, and the buyer can back out of the sale for any little complaint.
    - chasd00 4y ago
      > The inspector finds a hundred little problems with the house, and the buyer can back out of the sale for any little complaint. But that’s a very well known risk. An agent will have a whole checklist of things to look at before putting a house on the market to minimize that risk. Also, buyers lose at least some money if they back out, there’s a nominal sum put up that you don’t get back if you decide to not buy once the process is started.
      - cpwright 4y ago
        In my NY suburb, you do the inspection before the contract is signed. No money has yet changed hands, and it can be a point of negotiation or just walking away.
        FireBeyond 4y ago
        That gets expensive at $400-800 inspection fees for any house you want to put an offer on.
    - TimPC 4y ago
      In Canada this is called conditional on inspection and it’s a permitted clause in a sale. The problem is the minute you have multiple buyers there is overwhelming pressure to remove conditions that can make the sale fall through because the seller is more likely to take an offer that gives them a guaranteed sale.
    - alistairSH 4y ago
- alistairSH 4y ago
  It actually does happen in the US, but the only place I've seen it is bank or county/town auctions, where the house was either taken by the bank for non-payment or taken by the town to cover past taxes.
koolba 4y ago
> IMHO blind bidding is an unethical practice that should be outlawed regardless of its impact on housing prices. Why? There’s no special virtue ascribed to the purchaser v.s. the seller. Nothing stops the purchasers from standing in front of the property and publicly announcing their bids (outside of game theory). If they’re bidding less than they are willing to pay, then de facto they’re low balling the seller. There’s no gun to their head to purchase a particular house.
- 3qz 4y ago
  The real estate agents operate as a cartel and wouldn’t accept offers this way.
  - hkt 4y ago
    I don't know how it works in Canada, but in the UK the incentive is that most estate agents take a % of the sale value. They have every reason to push house prices higher. Cartel or no cartel, it is very harmful.
    - grasseh 4y ago
      That's exactly how it works in Canada too. Both estate agents split a % of the sale value. That's fine on the seller's side, IMO. But on the buyer's side, it's a silly conflict of interest.
    - nameisname 4y ago
      This is how it works in Canada and it's absolutely toxic. I have seen Realtors push people up on price when they're the highest bid.
      - sokoloff 4y ago
        The Realtors are (transparently disclosed as) working for the seller. Why wouldn't they do that? It's literally their job and everyone knows it. It's certainly the case that the agent who knows that a particular bidder is the highest/most attractive offer is working for the seller.
jollybean 4y ago
Actually you're not quite right. 1) 'Foreign Buyers' are price insensitive. In a market without much rational pricing, it's the 'confident signals' that set the price. i.e. 'Foreign Buyer' comes in and buys for 5% 'above asking' on Street A. What happens then, is all the other houses on that Street set their prices a big higher, and hold. Other buyers see that sale, and it 'validates' the price for everyone else. More sales on that street, set the pace for sales in the area. etc.. Everyone is 'following' the confident bidders. 2) 'Blind Bidding' just favours the seller. Buyers will only ever bid what they are willing to pay - not more. It's just a form of auction, that's it. It's not unethical. 3) Low interest rates 4) Way too much migration There is actually already enough construction. The notion that a city should expand it's services and population at break neck pace to accommodate the world's population is crazy. It's a 20th century 'body count' growth delusion strategy.
michaelje 4y ago
>> Australia tried this with tragic results Australian living in Canada here - unsure what the tragic results were? It’s helped a number of my friends buy their first home - with a small (~$10k) credit /reduced stamp duties and taxes on the first home owned and lived in (ie not an investment). Negative gearing has been far more impactful in increasing the cost of housing, with people buying multiple homes for investment purposes.
- domlebo70 4y ago
  It artificially drives prices up. This is not a good thing for housing
  - eertami 4y ago
    Exactly. Which makes the subsidies a funnelling of taxpayer money into the pockets of landowners - obviously this is not good, but if you have a population of majority landowners, then this is a sure-fire way to get votes.
    - imtringued 4y ago
      If there are 9 homes and 10 people, the 9th guy is going to bid everything he has, including government subsidies so he doesn't end up as the 10th guy who gets nothing. Those subsidies only work if there are 10 houses and 9 people because then you can choose whatever house you want and sellers must compete with lower and lower prices.
- NamTaf 4y ago
  It’s largely understood (I am in a pub halfway across the world and have no specific citation) that the FHBG just bumped the purchase price up by that amount. In Australia, many new buyers’ max purchase prices are dictated by their total borrowing capacity (in that, few limit themselves to less), and many FHBs are competing against each other for a similar cross-section of the market, so grants are easily absorbed by total prices because now FHB B can bid [x] higher and will. I agree that negative gearing is far more impactful, but I certainly don’t believe my FHB grant helped me enter the market. It just meant I paid that much more to a seller for the same thing.
TimPC 4y ago
The one advantage of blind bidding is the slowness. You’re able to consult with everyone you need to between bids. In a live auction you might not get to call your family before having to decide if you want to go $10k higher. Even if your wife is there you don’t have time for an extended discussion on whether it’s worthwhile.
- interblag 4y ago
  This makes me wonder why not just use a one-time second price auction? In that case everyone just needs to huddle up with their family once, submit their maximum price for the house, and know that they won't have a risk of over-paying relative to everyone else's valuation. https://en.wikipedia.org/wiki/Vickrey_auction https://en.wikipedia.org/wiki/Vickrey_auction
  - srveale 4y ago
    I would guess most sellers would not want to do this
- caymanjim 4y ago
  Getting rid of blind bidding doesn't mean it's replaced with a live real-time auction.
- PeterBarrett 4y ago
  I have found straight up bidding to be a much slower process. You don't have to immediately respond, if an estate agent is applying pressure you should just ignore them and respond with your bid when you're ready. On the other side if the sellers aren't happy with the highest bid they can just keep waiting for more people to turn up.
- mc32 4y ago
  Wouldn’t people set a maximum ceiling beyond which they would not go? Like you make your initial bid, which would not be the maximum and you go up till you win or you hit your max. If you bade your maximum already then obviously you’re out of contention.
boplicity 4y ago
I live in Toronto as well. We make a good income, have large savings for a down payment, and recently thought about buying a house. It's depressing. So, I decided to look at the City Plan -- to see what the actual plan is for addressing the housing cost crisis in Toronto. Not surprisingly, the real problem became very clear to me, almost immediately. The problem is not blind bidding. The problem is not foreign buyers. The problem is not low interest rates. The problem is the official city plan is 100% a NIMBY plan. From the plan itself: > While communities experience constant social and demographic change, the general physical character of Toronto’s residential Neighbourhoods endures. In other words, let's not change our back yards. > Physical changes to our established Neighbourhoods must be sensitive, gradual and “fit” the existing physical character. Again -- this means that the large inner-city neighborhoods full of mansions (such as Rosedale and Forest Hill), have to stay full of mansions. Just to spell it out: > If, for example, an existing zoning by-law permits only single detached houses in a particular geographic neighbourhood and the prevailing building type in that neighbourhood is single detached dwellings, then the Plan’s policies are to be interpreted to allow only single detached dwellings in order to respect and reinforce the established physical character of the neighbourhood You see this reflected in the development that does happen. Yonge & Eglinton just gets more dense -- because that's the "character" of the neighborhood. Meanwhile, in "fancy" neighborhoods, housing often gets less dense, because that conforms to the "prevailing" characteristic of the neighborhood. With the current plan, the city is going to be a city with super high density combined with ultra low density and very little in-between. In other words, it will be full of wonderful enclaves for the wealthy, and sardine-can housing for everyone else. This, of course, leads to issues such as the lack of schools available in the Yonge & Eglinton area, anod overcrowded transit, not to mention the lack of quality housing for families with two kids. (Try finding a decently sized 3 bedroom unit near playgrounds and schools. Yikes.) The solution, would be to allow more medium and low rise development throughout neighborhoods. The "character" of the existing neighbourhoods should be allowed to change. I don't blame Toronto though, this is a problem that is happening in most wealthy cities in North America. Doesn't mean we can't do better. We should. https://www.toronto.ca/wp-content/uploads/2017/11/97dd-cp-official-plan-chapter-4.pdf https://www.toronto.ca/wp-content/uploads/2017/11/97dd-cp-of...
- TimPC 4y ago
bko 4y ago
The question is why does something like blind bidding exist in real estate? It could exist in all sorts of places but doesn't. Imagine blind bidding when interviewing for a job. Write down the number you'd be willing to do the job for. Someone came in with a lower number, please resubmit. These weird market distortions in real estate have underlying causes. A lot of them are based off patchwork rules and regulations around real estate. Stuff like who you're allowed to sell to, how much you're taxed, the paperwork required etc. Putting more patch work on top of a system that's obviously broken will probably make things worse in the long run.
- gjhan 4y ago
  Employment, outside a handful of environments where salaries are public, is probably a great example of a market that is indeed blind bid - this is what a recruiter is doing when they ask what your “salary expectations” are.
  - derefr 4y ago
    Not... really? The problem with blind bidding is that it's iterative — that's the "bidding" part. People don't "bid" their own salary expectations down; let alone are they prompted to do so by their potential employer.
- asdfasgasdgasdg 4y ago
  The revenue equivalence theorem for auctions suggests it doesn't matter that much. Now, empirical testing has shown violations of this theorem, but the magnitude of the violations are not so huge as to really move the needle. Someone might be paying 10% more in a sealed bid first price auction than they otherwise would, but it's unlikely that it's more than that, and it may be a good deal less or none at all. No matter how you transact, of the good is too scarce compared to demand, the price is going to be high. We've seen skyrocketing prices in the US too and we don't use a sealed bid first price auction for the transfer of houses.
  - otterley 4y ago
    A 10% difference translates to a lot of money for a middle class homebuyer. That’s often enough to buy a new car.
tenpies 4y ago
> I don't think this will help. You are exactly right, but this is by design. You're talking about the Canadian Federal Liberals. The Prime Minister is a trustafarian who got elected because his father was Prime Minister. Every major minister of their party owns several investment properties. The Minister of Housing and Diversity and Inclusion (what a combo!) owns investment properties. These people have zero interesting in seeing property values go down. It's their own net worth we're talking about, not to mention the net worth of their friends and donors. The plan is to virtue signal their way to taking the least effective action possible (E.g. "ban foreign buyers", but leave loopholes so they can still buy through corporations), bring in another 500,000 people that will need housing, and then do as little as possible, but as loudly as possible, to "increase to supply". They've been in power 6 years and this has been an issue since day 1. Why anyone would expect them to address this issue on the face of Canadians still voting for them, is a mystery to any rational thinker. It's a group of people where you have to ignore what they say and focus on their actions. Did the Canadian Federal Budget look at all like a budget passed by someone trying to reduce inflation? Trying to cool down housing markets even a little bit? Of course not. Look at the hand signing the cheques, not the mouth speaking the lies.
- sjmm1989 4y ago
  Never trust a politician. Trust only that they are a politician.
- bregma 4y ago
  The rate of income property ownership is the same across all federal caucuses (including the NDP). Singling out one party for the transgressions of all parties does not prove any point other than maybe a personal partisan bias. The fact is the party political system in Canada is heavily biased towards the wealthy. Heck, in Ontario MPPs don't even get a pension so you you have to not only be wealthy to join the game but already self-supporting into retirement to be willing to consider it. You can only rely on politicians carrying through on their virtue signalling to do the right thing for the rest of us, so I'm not willing to criticize any of them for it.
jejeyyy77 4y ago
I disagree. IMO, blind bidding is suppressing prices not inflating them. Here’s why, as someone who has been on the ground and lost a few offers because we didn’t want to overbid. After the sold price was released, on multiple occasions we thought “damn! we’d have our that and $25K on top to get it had we known”. In a blind bidding system, you bid what you think the house is worth. In an open bidding system you start to bud as much as you are able to afford.
- techolic 4y ago
  > you bid what you think the house is worth Except you're rarely sure how much it's worth. The market is fluid, the psychology is working on you, and the feedback takes too long that by the time you know how much you missed it's too late to learn much from it.
- seandoe 4y ago
  That doesn't make sense. If you really bid what it was worth to you, why were you disappointed that the house went for more because you would have paid it (and more)?
  - 3qz 4y ago
    “what it’s worth” is just the maximum you can possibly afford when the alternative is never owning anything.
    - jejeyyy77 4y ago
      If your perspective is that people will sacrifice anything to own a home, then home prices are quite undervalued and have been for a long time.
      - 3qz 4y ago
        It’s kind of like how insulin is undervalued when there’s supply chain issues
- 4y ago
to11mtm 4y ago
PARTS of blind bidding make sense, from an unfortunate necessity standpoint. The primary scenario that comes to mind is where the neighborhood finds out Joe Outsider is the leading bidder, and they -really- don't like him for a reason they shouldn't. Blind/sealed bids help prevent Joe from getting specifically targeted for being outbid. (To an extent.) I'd love for a better solution to exist though.
- throwawaycities 4y ago
  Do you have data on how often neighborhoods come together as a collective and pool their money to bid on a property, not with the intent of actually purchasing but just to drive up the price because they don’t like the prospective buyer?
  - Ekaros 4y ago
    And aren't bids binding? They either have to buy, pay some penalty and still have the buyer get the house...
    - throwawaycities 4y ago
      I suppose it depends on the jurisdiction, but I would think it makes sense to protect both potential buyers and sellers, that an earnest money deposit would be required for a winning bid subject to forfeiture.
FerociousTimes 4y ago
Yes, this is a political move to appeal to the electorate for window dressing and not based on merits or practical and well-thought considerations. "Hey, we banned those darned foreigners just for you, can we get some love now at the ballot box? xoxo"
- mig39 4y ago
  If it's for political reasons, then why only two years? Voters won't be going to the ballot box for another 4 years or so.
  - FerociousTimes 4y ago
    It can be extended for more years, it could be the result of a political compromise. “If you like laws and sausages, you should never watch either one being made.”
  - skeeter2020 4y ago
    see: "this mask requirement with last for 30 days" ..extended ad-infinitum. This is big policy 101.
ErikVandeWater 4y ago
One nuance to this is that the "bid" is much more than just the number of dollars to be exchanged. It's credit quality, cash offer/not, and subjective things ("I want to sell my house to a family with kids, not a real estate developer") So even if someone is told which bid is currently in the lead, the subjective elements may mean out-bidding that offer would not put them in a winning position. Not to say eliminating blind bidding wouldn't be a good idea.
mensetmanusman 4y ago
Bidders out-bid themselves?! That is messed up…
- data-ottawa 4y ago
  That happens, hard to say how often, but it happened to us. On my current house they said there was another competing offer and it was a close choice, they asked if we wanted to increase our bid to be more competitive. We dropped it by $15k and it turned out the competing offer wasn’t even close to our initial offer. They just wanted to know if we’d throw in $5k or $10k more.
silicon2401 4y ago
If I'm selling a house, why should you know how much other people are offering me?
alberth 4y ago
> "IMHO blind bidding is an unethical practice" When you're applying to a new job, do you feel it's ok for the hiring company to ask you what exactly you currently make so that they can offer you $1.00 more than what you currently today? If not, how is that not "unethical"? (Also note, in the US at least - you can't ask someone what they currently earn). I just don't understand why it's unethical. Maybe the seller way under estimated the value of their home, why shouldn't they be allowed to sell it at the highest price? EDIT: why the downvote? If you don't agree - why not reply so we can have a healthy dialogue.
- deleted 4y ago
  [deleted]
- whywhywhywhy 4y ago
  >do you feel it's ok for the hiring company to ask you what exactly you currently make so that they can offer you $1.00 more than what you currently today? Yes but I don't have to accept it and I can then tell them what I want and they're free to turn it down and it's a discussion. The hiring equivalent would be every applicant would write their expected salary down. Then the lowest wins with no negotiation.
  - alberth 4y ago
    If you're a home buyer, you also don't have to submit a bid either if you feel the price is too high.
- InCityDreams 4y ago
  >Also note, in the US at least - you can't ask someone what they currently earn. But they sure do like to tell you.
jimbob45 4y ago
>I don't think this will help Can it hurt though? It's a massive conflict of interest to have foreigners buying your homes without any personal stake in your country. Shouldn't this be the default stance for all nations? It's not like we haven't seen deleterious consequences already from California allowing the Chinese to buy up homes ad nauseum.
deleted 4y ago
[deleted]
ed_balls 4y ago
> Australia tried this with tragic results It's the opposite, worked like charm. Your main voting base, powerful people, developers, banks want price of properties to increase.
hitovst 4y ago
> I don't think this will help. Depends on what they hope to accomplish.
JoeAltmaier 4y ago
Unethical? Give your honest best price and you're done. Whatever the seller is saying, whatever words come out of their mouth, unless it's "Sold!" you ignore them.
- Arrath 4y ago
  In a perfect world, yes. But that discounts all the psychology of the situation, FOMO, how invested the buyers may be in the property, etc. Its a rather one sided and exploitative situation.
RspecMAuthortah 4y ago
Its actually much more endemic than this. To start off, Canada's service sector dominating economy means jobs are concentrated in cities like Toronto, Vancouver, Montreal etc. So most people want to move and live those places. To make it worse, the government has plans to bring over 1.2M people over next 3-4 years time range as immigrants who again because of the fact that our economy is not diverse enough, tend to settle in those cities. Which makes the already heated housing market worse. And everyone knows in those cities, local officials and councillors are all in builders' pockets. Large tier builders like Richcraft are routinely raising their prices by 5-10K per every release within last 2-3weeks since last 2020 and still they have all slots closing in 5 min of opening. They are keeping the supply artificially low and I imagine the inflation and supply chain issues are not going to make things any easier. Bottom line, house prices continue to rise. The only thing that can temporarily put a halt to this is if we end up with rates as high as 10+%. Even then I suspect there are enough people with equities and large cash pool (hell our point based immigration system makes sure this is the case for all incoming immigrants).. Middle class dream in Canada is over for most people. When you can't afford a decent place in Toronto or Vancouver with a tech salary you know its over.
- switchbak 4y ago
  There's stories of professional couples - both doctors - who can't afford a place in Vancouver. It's completely crazy there. I consider myself lucky to have got a foothold (well) outside the city when I did. I can't imagine how bad it'd have been with the Liberals (provincial) still in power.
kodah 4y ago
Just throwing my two cents in here from the Bay Area and in a similar market. The things that are wrong with real estate aren't headline producing or interesting. - Blind bids sound completely unethical. Why are real estate agents enabling this? Are they not bound to a code of ethics? - Allowing buyers to offer cash on top of the value of a home should be illegal. You should be allowed to sell your home for what it appraises for, no more. Again, why are real estate agents enabling this behavior? - Requiring buyers to submit letters, photos, and videos in order to buy a home is insane. They did away with this in California, but is it gone everywhere else? Another question of real estate agent ethics. - Stop allowing companies to acquire residential real estate. This just, doesn't even make sense. Patch these things up and you'll have major progress in freeing up a lot of real estate transactions and overvaluations.

by pards 4y ago

hallway_monitor 4y ago

I saw an Australian sitcom where the house went up for auction. It was a proper live auction where everyone showed up to bid on the house. I was flabbergasted as I had no idea things were done in any other way than blind bidding as that is how it is always done here in the US.

stevesimmons 4y ago
In Melbourne, this is totally normal. Everyone stands in the street, prospective buyers, neighbours, and people starting their house search. The estate agent stands on the front step, acting as the auctioneer, using the rolled up "Section 32" document like a gavel. Typically the auctioneer draws out bids in $10-20k increments, then knocks it down with a "going once, going twice, going three times..." call. Just before declaring it sold, the agent normally stops, goes inside to consult with the vendor, and if the price is above their reserve price, goes back outside and says "the house is now on the market". Now the auction gets serious... Usually another couple of bidders reveal themselves at this stage. The increments can drop to $1k. If there is a battle between the last two or three bidders, the final price can go up another $50-100k or so. Eventually the final bid is locked in with a final call of "going once, going twice, going three times, to the man in the blue shirt." The winning bidder goes inside with the estate agent, hands over a cheque for 10% of the purchase price, signs the contract part of the Section 32 statement, and is then committed to pay the balance in 60 or 90 days. Sales almost never fall through. If the buyer cannot get financing etc, the seller keeps their 10% deposit. The seller cannot back out. I bought my house like this, and sold it again 20 years later the same way. It's a totally predictable, well regulated, very transparent process. The weekend auction results are all published on Monday morning, both for every house, and the aggregate "clearance rates" for sold versus "passed in". This is so unlike UK, where each sale has a chain of buyers, all "subject to finance", and no certainty or speed!
- bitshiftfaced 4y ago
  > Sales almost never fall through. If the buyer cannot get financing etc, the seller keeps their 10% deposit. The seller cannot back out. In the states, once the purchase agreement is signed, the home goes through inspection at some point before the sale. The inspector finds a hundred little problems with the house, and the buyer can back out of the sale for any little complaint.
  - chasd00 4y ago
    > The inspector finds a hundred little problems with the house, and the buyer can back out of the sale for any little complaint. But that’s a very well known risk. An agent will have a whole checklist of things to look at before putting a house on the market to minimize that risk. Also, buyers lose at least some money if they back out, there’s a nominal sum put up that you don’t get back if you decide to not buy once the process is started.
    - cpwright 4y ago
      In my NY suburb, you do the inspection before the contract is signed. No money has yet changed hands, and it can be a point of negotiation or just walking away.
      - FireBeyond 4y ago
        That gets expensive at $400-800 inspection fees for any house you want to put an offer on.
  - TimPC 4y ago
    In Canada this is called conditional on inspection and it’s a permitted clause in a sale. The problem is the minute you have multiple buyers there is overwhelming pressure to remove conditions that can make the sale fall through because the seller is more likely to take an offer that gives them a guaranteed sale.
  - alistairSH 4y ago
alistairSH 4y ago
It actually does happen in the US, but the only place I've seen it is bank or county/town auctions, where the house was either taken by the bank for non-payment or taken by the town to cover past taxes.

koolba 4y ago

> IMHO blind bidding is an unethical practice that should be outlawed regardless of its impact on housing prices. Why? There’s no special virtue ascribed to the purchaser v.s. the seller. Nothing stops the purchasers from standing in front of the property and publicly announcing their bids (outside of game theory). If they’re bidding less than they are willing to pay, then de facto they’re low balling the seller. There’s no gun to their head to purchase a particular house.

3qz 4y ago
The real estate agents operate as a cartel and wouldn’t accept offers this way.
- hkt 4y ago
  I don't know how it works in Canada, but in the UK the incentive is that most estate agents take a % of the sale value. They have every reason to push house prices higher. Cartel or no cartel, it is very harmful.
  - grasseh 4y ago
    That's exactly how it works in Canada too. Both estate agents split a % of the sale value. That's fine on the seller's side, IMO. But on the buyer's side, it's a silly conflict of interest.
  - nameisname 4y ago
    This is how it works in Canada and it's absolutely toxic. I have seen Realtors push people up on price when they're the highest bid.
    - sokoloff 4y ago
      The Realtors are (transparently disclosed as) working for the seller. Why wouldn't they do that? It's literally their job and everyone knows it. It's certainly the case that the agent who knows that a particular bidder is the highest/most attractive offer is working for the seller.

jollybean 4y ago

Actually you're not quite right. 1) 'Foreign Buyers' are price insensitive. In a market without much rational pricing, it's the 'confident signals' that set the price. i.e. 'Foreign Buyer' comes in and buys for 5% 'above asking' on Street A. What happens then, is all the other houses on that Street set their prices a big higher, and hold. Other buyers see that sale, and it 'validates' the price for everyone else. More sales on that street, set the pace for sales in the area. etc.. Everyone is 'following' the confident bidders. 2) 'Blind Bidding' just favours the seller. Buyers will only ever bid what they are willing to pay - not more. It's just a form of auction, that's it. It's not unethical. 3) Low interest rates 4) Way too much migration There is actually already enough construction. The notion that a city should expand it's services and population at break neck pace to accommodate the world's population is crazy. It's a 20th century 'body count' growth delusion strategy.

michaelje 4y ago

>> Australia tried this with tragic results Australian living in Canada here - unsure what the tragic results were? It’s helped a number of my friends buy their first home - with a small (~$10k) credit /reduced stamp duties and taxes on the first home owned and lived in (ie not an investment). Negative gearing has been far more impactful in increasing the cost of housing, with people buying multiple homes for investment purposes.

domlebo70 4y ago
It artificially drives prices up. This is not a good thing for housing
- eertami 4y ago
  Exactly. Which makes the subsidies a funnelling of taxpayer money into the pockets of landowners - obviously this is not good, but if you have a population of majority landowners, then this is a sure-fire way to get votes.
  - imtringued 4y ago
    If there are 9 homes and 10 people, the 9th guy is going to bid everything he has, including government subsidies so he doesn't end up as the 10th guy who gets nothing. Those subsidies only work if there are 10 houses and 9 people because then you can choose whatever house you want and sellers must compete with lower and lower prices.
NamTaf 4y ago
It’s largely understood (I am in a pub halfway across the world and have no specific citation) that the FHBG just bumped the purchase price up by that amount. In Australia, many new buyers’ max purchase prices are dictated by their total borrowing capacity (in that, few limit themselves to less), and many FHBs are competing against each other for a similar cross-section of the market, so grants are easily absorbed by total prices because now FHB B can bid [x] higher and will. I agree that negative gearing is far more impactful, but I certainly don’t believe my FHB grant helped me enter the market. It just meant I paid that much more to a seller for the same thing.

TimPC 4y ago

The one advantage of blind bidding is the slowness. You’re able to consult with everyone you need to between bids. In a live auction you might not get to call your family before having to decide if you want to go $10k higher. Even if your wife is there you don’t have time for an extended discussion on whether it’s worthwhile.

interblag 4y ago
This makes me wonder why not just use a one-time second price auction? In that case everyone just needs to huddle up with their family once, submit their maximum price for the house, and know that they won't have a risk of over-paying relative to everyone else's valuation. https://en.wikipedia.org/wiki/Vickrey_auction https://en.wikipedia.org/wiki/Vickrey_auction
- srveale 4y ago
  I would guess most sellers would not want to do this
caymanjim 4y ago
Getting rid of blind bidding doesn't mean it's replaced with a live real-time auction.
PeterBarrett 4y ago
I have found straight up bidding to be a much slower process. You don't have to immediately respond, if an estate agent is applying pressure you should just ignore them and respond with your bid when you're ready. On the other side if the sellers aren't happy with the highest bid they can just keep waiting for more people to turn up.
mc32 4y ago
Wouldn’t people set a maximum ceiling beyond which they would not go? Like you make your initial bid, which would not be the maximum and you go up till you win or you hit your max. If you bade your maximum already then obviously you’re out of contention.

boplicity 4y ago

I live in Toronto as well. We make a good income, have large savings for a down payment, and recently thought about buying a house. It's depressing. So, I decided to look at the City Plan -- to see what the actual plan is for addressing the housing cost crisis in Toronto. Not surprisingly, the real problem became very clear to me, almost immediately. The problem is not blind bidding. The problem is not foreign buyers. The problem is not low interest rates. The problem is the official city plan is 100% a NIMBY plan. From the plan itself: > While communities experience constant social and demographic change, the general physical character of Toronto’s residential Neighbourhoods endures. In other words, let's not change our back yards. > Physical changes to our established Neighbourhoods must be sensitive, gradual and “fit” the existing physical character. Again -- this means that the large inner-city neighborhoods full of mansions (such as Rosedale and Forest Hill), have to stay full of mansions. Just to spell it out: > If, for example, an existing zoning by-law permits only single detached houses in a particular geographic neighbourhood and the prevailing building type in that neighbourhood is single detached dwellings, then the Plan’s policies are to be interpreted to allow only single detached dwellings in order to respect and reinforce the established physical character of the neighbourhood You see this reflected in the development that does happen. Yonge & Eglinton just gets more dense -- because that's the "character" of the neighborhood. Meanwhile, in "fancy" neighborhoods, housing often gets less dense, because that conforms to the "prevailing" characteristic of the neighborhood. With the current plan, the city is going to be a city with super high density combined with ultra low density and very little in-between. In other words, it will be full of wonderful enclaves for the wealthy, and sardine-can housing for everyone else. This, of course, leads to issues such as the lack of schools available in the Yonge & Eglinton area, anod overcrowded transit, not to mention the lack of quality housing for families with two kids. (Try finding a decently sized 3 bedroom unit near playgrounds and schools. Yikes.) The solution, would be to allow more medium and low rise development throughout neighborhoods. The "character" of the existing neighbourhoods should be allowed to change. I don't blame Toronto though, this is a problem that is happening in most wealthy cities in North America. Doesn't mean we can't do better. We should. https://www.toronto.ca/wp-content/uploads/2017/11/97dd-cp-official-plan-chapter-4.pdf https://www.toronto.ca/wp-content/uploads/2017/11/97dd-cp-of...

TimPC 4y ago

bko 4y ago

The question is why does something like blind bidding exist in real estate? It could exist in all sorts of places but doesn't. Imagine blind bidding when interviewing for a job. Write down the number you'd be willing to do the job for. Someone came in with a lower number, please resubmit. These weird market distortions in real estate have underlying causes. A lot of them are based off patchwork rules and regulations around real estate. Stuff like who you're allowed to sell to, how much you're taxed, the paperwork required etc. Putting more patch work on top of a system that's obviously broken will probably make things worse in the long run.

gjhan 4y ago
Employment, outside a handful of environments where salaries are public, is probably a great example of a market that is indeed blind bid - this is what a recruiter is doing when they ask what your “salary expectations” are.
- derefr 4y ago
  Not... really? The problem with blind bidding is that it's iterative — that's the "bidding" part. People don't "bid" their own salary expectations down; let alone are they prompted to do so by their potential employer.
asdfasgasdgasdg 4y ago
The revenue equivalence theorem for auctions suggests it doesn't matter that much. Now, empirical testing has shown violations of this theorem, but the magnitude of the violations are not so huge as to really move the needle. Someone might be paying 10% more in a sealed bid first price auction than they otherwise would, but it's unlikely that it's more than that, and it may be a good deal less or none at all. No matter how you transact, of the good is too scarce compared to demand, the price is going to be high. We've seen skyrocketing prices in the US too and we don't use a sealed bid first price auction for the transfer of houses.
- otterley 4y ago
  A 10% difference translates to a lot of money for a middle class homebuyer. That’s often enough to buy a new car.

tenpies 4y ago

> I don't think this will help. You are exactly right, but this is by design. You're talking about the Canadian Federal Liberals. The Prime Minister is a trustafarian who got elected because his father was Prime Minister. Every major minister of their party owns several investment properties. The Minister of Housing and Diversity and Inclusion (what a combo!) owns investment properties. These people have zero interesting in seeing property values go down. It's their own net worth we're talking about, not to mention the net worth of their friends and donors. The plan is to virtue signal their way to taking the least effective action possible (E.g. "ban foreign buyers", but leave loopholes so they can still buy through corporations), bring in another 500,000 people that will need housing, and then do as little as possible, but as loudly as possible, to "increase to supply". They've been in power 6 years and this has been an issue since day 1. Why anyone would expect them to address this issue on the face of Canadians still voting for them, is a mystery to any rational thinker. It's a group of people where you have to ignore what they say and focus on their actions. Did the Canadian Federal Budget look at all like a budget passed by someone trying to reduce inflation? Trying to cool down housing markets even a little bit? Of course not. Look at the hand signing the cheques, not the mouth speaking the lies.

sjmm1989 4y ago
Never trust a politician. Trust only that they are a politician.
bregma 4y ago
The rate of income property ownership is the same across all federal caucuses (including the NDP). Singling out one party for the transgressions of all parties does not prove any point other than maybe a personal partisan bias. The fact is the party political system in Canada is heavily biased towards the wealthy. Heck, in Ontario MPPs don't even get a pension so you you have to not only be wealthy to join the game but already self-supporting into retirement to be willing to consider it. You can only rely on politicians carrying through on their virtue signalling to do the right thing for the rest of us, so I'm not willing to criticize any of them for it.

jejeyyy77 4y ago

I disagree. IMO, blind bidding is suppressing prices not inflating them. Here’s why, as someone who has been on the ground and lost a few offers because we didn’t want to overbid. After the sold price was released, on multiple occasions we thought “damn! we’d have our that and $25K on top to get it had we known”. In a blind bidding system, you bid what you think the house is worth. In an open bidding system you start to bud as much as you are able to afford.

techolic 4y ago
> you bid what you think the house is worth Except you're rarely sure how much it's worth. The market is fluid, the psychology is working on you, and the feedback takes too long that by the time you know how much you missed it's too late to learn much from it.
seandoe 4y ago
That doesn't make sense. If you really bid what it was worth to you, why were you disappointed that the house went for more because you would have paid it (and more)?
- 3qz 4y ago
  “what it’s worth” is just the maximum you can possibly afford when the alternative is never owning anything.
  - jejeyyy77 4y ago
    If your perspective is that people will sacrifice anything to own a home, then home prices are quite undervalued and have been for a long time.
    - 3qz 4y ago
      It’s kind of like how insulin is undervalued when there’s supply chain issues
4y ago

to11mtm 4y ago

PARTS of blind bidding make sense, from an unfortunate necessity standpoint. The primary scenario that comes to mind is where the neighborhood finds out Joe Outsider is the leading bidder, and they -really- don't like him for a reason they shouldn't. Blind/sealed bids help prevent Joe from getting specifically targeted for being outbid. (To an extent.) I'd love for a better solution to exist though.

throwawaycities 4y ago
Do you have data on how often neighborhoods come together as a collective and pool their money to bid on a property, not with the intent of actually purchasing but just to drive up the price because they don’t like the prospective buyer?
- Ekaros 4y ago
  And aren't bids binding? They either have to buy, pay some penalty and still have the buyer get the house...
  - throwawaycities 4y ago
    I suppose it depends on the jurisdiction, but I would think it makes sense to protect both potential buyers and sellers, that an earnest money deposit would be required for a winning bid subject to forfeiture.

FerociousTimes 4y ago

Yes, this is a political move to appeal to the electorate for window dressing and not based on merits or practical and well-thought considerations. "Hey, we banned those darned foreigners just for you, can we get some love now at the ballot box? xoxo"

mig39 4y ago
If it's for political reasons, then why only two years? Voters won't be going to the ballot box for another 4 years or so.
- FerociousTimes 4y ago
  It can be extended for more years, it could be the result of a political compromise. “If you like laws and sausages, you should never watch either one being made.”
- skeeter2020 4y ago
  see: "this mask requirement with last for 30 days" ..extended ad-infinitum. This is big policy 101.

ErikVandeWater 4y ago

One nuance to this is that the "bid" is much more than just the number of dollars to be exchanged. It's credit quality, cash offer/not, and subjective things ("I want to sell my house to a family with kids, not a real estate developer") So even if someone is told which bid is currently in the lead, the subjective elements may mean out-bidding that offer would not put them in a winning position. Not to say eliminating blind bidding wouldn't be a good idea.

mensetmanusman 4y ago

Bidders out-bid themselves?! That is messed up…

data-ottawa 4y ago
That happens, hard to say how often, but it happened to us. On my current house they said there was another competing offer and it was a close choice, they asked if we wanted to increase our bid to be more competitive. We dropped it by $15k and it turned out the competing offer wasn’t even close to our initial offer. They just wanted to know if we’d throw in $5k or $10k more.

silicon2401 4y ago

If I'm selling a house, why should you know how much other people are offering me?

alberth 4y ago

> "IMHO blind bidding is an unethical practice" When you're applying to a new job, do you feel it's ok for the hiring company to ask you what exactly you currently make so that they can offer you $1.00 more than what you currently today? If not, how is that not "unethical"? (Also note, in the US at least - you can't ask someone what they currently earn). I just don't understand why it's unethical. Maybe the seller way under estimated the value of their home, why shouldn't they be allowed to sell it at the highest price? EDIT: why the downvote? If you don't agree - why not reply so we can have a healthy dialogue.

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whywhywhywhy 4y ago
>do you feel it's ok for the hiring company to ask you what exactly you currently make so that they can offer you $1.00 more than what you currently today? Yes but I don't have to accept it and I can then tell them what I want and they're free to turn it down and it's a discussion. The hiring equivalent would be every applicant would write their expected salary down. Then the lowest wins with no negotiation.
- alberth 4y ago
  If you're a home buyer, you also don't have to submit a bid either if you feel the price is too high.
InCityDreams 4y ago
>Also note, in the US at least - you can't ask someone what they currently earn. But they sure do like to tell you.

jimbob45 4y ago

>I don't think this will help Can it hurt though? It's a massive conflict of interest to have foreigners buying your homes without any personal stake in your country. Shouldn't this be the default stance for all nations? It's not like we haven't seen deleterious consequences already from California allowing the Chinese to buy up homes ad nauseum.

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ed_balls 4y ago

> Australia tried this with tragic results It's the opposite, worked like charm. Your main voting base, powerful people, developers, banks want price of properties to increase.

hitovst 4y ago

> I don't think this will help. Depends on what they hope to accomplish.

JoeAltmaier 4y ago

Unethical? Give your honest best price and you're done. Whatever the seller is saying, whatever words come out of their mouth, unless it's "Sold!" you ignore them.

Arrath 4y ago
In a perfect world, yes. But that discounts all the psychology of the situation, FOMO, how invested the buyers may be in the property, etc. Its a rather one sided and exploitative situation.

RspecMAuthortah 4y ago

Its actually much more endemic than this. To start off, Canada's service sector dominating economy means jobs are concentrated in cities like Toronto, Vancouver, Montreal etc. So most people want to move and live those places. To make it worse, the government has plans to bring over 1.2M people over next 3-4 years time range as immigrants who again because of the fact that our economy is not diverse enough, tend to settle in those cities. Which makes the already heated housing market worse. And everyone knows in those cities, local officials and councillors are all in builders' pockets. Large tier builders like Richcraft are routinely raising their prices by 5-10K per every release within last 2-3weeks since last 2020 and still they have all slots closing in 5 min of opening. They are keeping the supply artificially low and I imagine the inflation and supply chain issues are not going to make things any easier. Bottom line, house prices continue to rise. The only thing that can temporarily put a halt to this is if we end up with rates as high as 10+%. Even then I suspect there are enough people with equities and large cash pool (hell our point based immigration system makes sure this is the case for all incoming immigrants).. Middle class dream in Canada is over for most people. When you can't afford a decent place in Toronto or Vancouver with a tech salary you know its over.

switchbak 4y ago
There's stories of professional couples - both doctors - who can't afford a place in Vancouver. It's completely crazy there. I consider myself lucky to have got a foothold (well) outside the city when I did. I can't imagine how bad it'd have been with the Liberals (provincial) still in power.

kodah 4y ago

Just throwing my two cents in here from the Bay Area and in a similar market. The things that are wrong with real estate aren't headline producing or interesting. - Blind bids sound completely unethical. Why are real estate agents enabling this? Are they not bound to a code of ethics? - Allowing buyers to offer cash on top of the value of a home should be illegal. You should be allowed to sell your home for what it appraises for, no more. Again, why are real estate agents enabling this behavior? - Requiring buyers to submit letters, photos, and videos in order to buy a home is insane. They did away with this in California, but is it gone everywhere else? Another question of real estate agent ethics. - Stop allowing companies to acquire residential real estate. This just, doesn't even make sense. Patch these things up and you'll have major progress in freeing up a lot of real estate transactions and overvaluations.