New rules for Ontario real estate are coming into force that are meant to provide more clarity and choice for buyers and sellers, though they don’t go as far as some had hoped.
The rules, which took effect Friday, include the option for sellers to use an open bidding process, improvements to broker and brokerage disclosures, and ways to avoid conflicts on multiple representation.
The open bidding option gives the seller the choice to disclose submitted bid prices to potential buyers, something they were previously banned from doing.
Open bidding has been advocated by some, including Ontario Green Party leader Mike Schreiner, as a way to reduce rampant overbidding in real estate and help reduce prices.
“A consistently transparent bidding process will help bring down the skyrocketing price of houses,” he said when the Ontario government announced open bidding would be an option for sellers.
The federal Liberals also promised in their 2021 election campaign to end blind bidding because it said not knowing other bids ultimately drives up home prices.
Joseph Richer, registrar at the Real Estate Council of Ontario, said however that there’s little research on how blind bidding affects prices, adding there are some indications that open auctions in Australia put upward pressure on prices.
He also said mandating open bidding could lead to negative effects for sellers.
“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.”
Making it optional gives more options to sellers, Richer said.
“We don’t anticipate a big market swing. It might help some parties in some transactions.”
Sellers who are having trouble finding buyers might want to allow their agent to disclose bids to attract more, he pointed out as an example.
The option doesn’t look that appealing to most sellers in the current market, but real estate agents will likely find some uses, said Randy Oickle, president of Innovation Realty Ltd. in Kanata, Ont.
“(There’s) likely going to be some new business models that come along to try to take advantage of new possibilities.”
He said he would have liked to see some rules around the process of using open bidding.
“The fact that there’s no sort of framework for using it, I think potentially creates challenges.”
Oickle said, overall, he sees the changes in the act as quite significant.
Other notable parts of the law include the ability to choose a designated representative.
Previously, if the buyer and sellers’ agents worked at the same brokerage, then, given the potential conflict of interest, they would fall under a multiple representation scenario. In these cases, agents were generally only able to act as facilitators, and were limited on how much they could advise clients, including on what is a good price.
By designating specific agents, the buyer and seller under the new rules would free themselves from multiple representation, and agents could advocate more actively on their behalf, said Richer.
“It allows you, if I hire you, you now are free to continue to advocate for me and to offer the services and all your experience that you can bring to bear on my behalf, which you were prohibited from doing under multiple representation.”
The updates, Phase 2 of changes under the act, also include an amended code of ethics, new enforcement tools for RECO, and an information guide from the agency that prospective clients are to receive before they agree to having an agent represent them.
As for the federal promise of open bidding, Housing Minister spokesperson Micaal Ahmed said that since real estate generally falls under provincial and territorial jurisdictions, the federal government continues to consult with stakeholders to make a home buyers’ bill of rights.
The work is well underway and nearing completion, he said.
This report by The Canadian Press was first published Dec. 1, 2023.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
