New real estate platform offers an alternative to blind bidding

The conventional wisdom in real estate is that blind bidding is never going away, despite strong opposition to the practice, because of a simple assertion: they work.

“For my entire career we’ve been handcuffed doing blind bidding,” Adam Nadler, a realtor with Royal LePage Your Community Realty in Richmond Hill, Ont. The theory goes that if buyers have to jump into a pool with no information other than the number of other registered bids they will all make their maximum offer – and perhaps overpay – gaining the seller the best possible price. It has been such a strongly held view that, until this year, the laws governing Ontario realtors wouldn’t even allow them to share details of competing bids. “Buyers were bidding against themselves, and that becomes a really big issue,” said Mr. Nadler.

However, with changes to the Trust in Real Estate Services Act (TRESA) coming into force, Ontario sellers can now choose whether or not they want to keep the guessing game going. Exactly how to present that newly available information was left open in the TRESA legislation, leaving a gap for potentially new ways to do business.

“For the consumer, they don’t want the guesswork, they want more information,” said Tim Quirk, Chief Strategy Officer with Final Offer, a U.S.-based venture-backed real estate tech platform that’s ready to test whether the old blind bidding status quo can compete with a more transparent way to sell homes.

FinalOffer.com launched in Canada in recent weeks working with three large Toronto-area brokerages. Its website looks like any number of online real estate listings services, with the key difference that sellers can let potential bidders know about offers they have received and even offer guidance about what prices they might accept above the initial list price. Sellers commit themselves to a price they would consider and also a “final offer” price – a sort of pre-loaded bully offer price, that would let a buyer skip the bidding contest and lock up the sale. The first Ontario home to sell on the platform was 367 Balliol St., purchased via a final offer for $2.1-million on an initial list price of $1.699-million.

Mr. Nadler has already got one listing with open bids on the platform. He’s an early adopter, having first heard about Final Offer from U.S.-based colleagues in the fall of 2023. He pushed his brokerage to consider adopting it.

“People just want to have a fair chance, or a fair opportunity to buy,” said Vivian Risi, a veteran Toronto realtor and Mr. Nadler’s boss. She’s rolled the platform out to the hundreds of agents working with her, but doesn’t expect them to abandon blind bidding. “I don’t think it’s going to be overnight. … I think it’s going to be an adjustment process. There will be certain clients where this feels right for them. Now they have an option.”

Final Offer launched in 2022, and has rolled out to 10 states and now Ontario. According to Mr. Quirk there have been 500 homes sold in the U.S. on Final Offer, 85 per cent sold with winning bid prices disclosed to bidders in some way. There’s also early data that suggests there’s a price upside to going transparent. “What we’re seeing is on average, they are selling their homes for 2 to 7 per cent sales-to-list price higher than market average,” he said.

Final Offer’s share of the U.S. market is still a drop in the bucket. In the Washington metropolitan area where Final Offer has been operating since it launched, there were more than 60,000 homes sold in 2023.

There are many who don’t believe open offers of any kind are going to take over real estate in Ontario, or Canada.

“I’ll tell you right now: sellers, they never say ‘yes’ to transparency,” said Nasma Ali, broker with One Group – Real Broker Ontario Ltd. “The whole system of no transparency is in favour of the seller.”

Not that blind bidding works every time: Ms. Ali’s seen inexperienced agents botch an offer night for a seller by neglecting to come back to buyers for a second round, leaving willing bidders waiting and leaving potential money on the table. “The only argument I see for a seller, maybe some people might be more inclined to offer more – and be more comfortable to offer their max – if they are seeing it’s close,” she said.

Ms. Ali has heard from buyers who call sellers holding blind auctions greedy, but she questions why anyone would thinking that sellers shouldn’t be allowed to pursue the highest possible dollar.

“There’s an element we all forget, especially in a country where it can be very hard to get by: Sellers are often in a very rare position of finally being able to get ahead and finally make some money,” she said. For many long-time homeowners, their house is their No. 1 asset, in recent decades, the one that’s appreciated the most.

There is little data to prove that blind auctions make prices rise higher than open auctions. A 2021 study from the University of Ottawa’s Smart Prosperity Institute found that Sweden and New Zealand (countries with more open bidding) actually both outperformed Canada’s real estate price inflation.

“This isn’t something that will help affordability, it’s not meant to do that,” said Mr. Adler. Final Offer data suggests it can deliver higher prices with transparency, he said, while making sellers feel better about the whole process. “It’s doing extremely well for sellers, but the rated satisfaction for buyers has also increased,” he said.

“Whether buying a car or computer, the better you understand your decision the better you feel about it,” said Chris Slightham, president of Royal LePage Signature Realty, who says his brokerage jumped on the Final Offer train in part because it was venturing into unknown territory. “We knew we needed something to offer clients and consumers. … What comes with that is trial and error and learning and what scenarios does it work best in. For now, we’re excited to be on the leading edge and bring it to the marketplace.”

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