A Toronto realtor is calling for tougher rules around bidding wars after her clients were shocked to discover they’d paid $90,000 over asking for a midtown house on which theirs was the only offer.
While she eventually convinced the listing agent and the sellers to accept about half that — $45,000 over asking for the almost $1 million home — realtor Josie Stern says the incident last month is just further proof that more transparency is needed in the bidding process.
It should be mandatory for listing agents to provide potential buyers with a roster of all brokers and agents making offers on the same property — before the presentation of offers begins, says Stern, who believed there were three interested bidders.
It was only when the listing agent came back to her “10 minutes later” to say her clients’ bid had been accepted that Stern realized there was something wrong. She had been expecting a late night of bids and counter bids.
“This is a call to action,” says Stern, noting the GTA market has been largely a sellers’ market since 1996. “Sixteen years of buyer abuse is enough.
“If it was mandatory for (the listing agent) to provide a list of everyone who was participating, this wouldn’t have happened.”
In fact, the Real Estate Council of Ontario, the regulatory body for the province’s 58,000 realtors, has had such a surge in calls from those who’ve lost — or won — bidding wars, they’re now reviewing whether to urge legislative changes around the process, said Bruce Matthews, deputy registrar in charge of regulatory compliance.
Under RECO’s rules, agents must disclose how many offers there are on a property. But consumer complaints persist about so-called “phantom bids” — selling agents claiming there are numerous bids that don’t exist or never materialized.
Matthews believes that isn’t so much “a hugely prevalent problem” as a “perception” by frustrated homebuyers. (Just four agents have been disciplined for the practise over the last decade.)
That homebuyer frustration has been compounded by real estate prices that have doubled over the last decade, fuelled largely by low interest rates and not enough supply of homes on the market to keep up with demand.
This has played out in bidding wars that have escalated to sky-high levels over the last two to three years in particular, even in suburban municipalities such as Richmond Hill and Pickering.
Matthews acknowledges “there is no record-keeping requirement now with respect to offers that are not accepted,” and RECO officials are considering if that’s needed.