As home prices continue to sky-rocket, one common practice we are seeing all across Canada is the blind bidding. When multiple buyers bid on a property, they have no idea what their competitors are offering. Many bidders aim high in hopes of beating out everyone else, driving up prices as excessive bids set new precedents for a neighbourhood.

Houses in the city of Toronto are selling from $100,000 to $700,000 over the asking price, according to sales data. Bidding wars, unconditional offers and no home inspections are now common in small cities that have never experienced a market this competitive. Keep in mind some real estate agents set unrealistically low asking prices in order to create interest and whip up a frenzy of bidding. The shortage of properties for sale has created this competition and pushed prices up in many areas since the start of the pandemic.

Would an auction process be the way to go like they do in Australia to slow down the price increases? Bids are kept secret in Canada and no would-be buyer knows what the others have offered. In Australia, the process is transparent - where buyers stand out front of the property and openly bid through an auction. Since all bids are public, no one bidder has an advantage. The system there isn't perfect either. Despite the protections, some first-time homebuyers in parts of Australia still feel shut out, due to rising prices and intense demand.

Regulators have so far been reluctant to tinker with rules around the bidding process. In a free market, “a house is worth what someone is willing to pay for it”, is the long-held position of the Real Estate Council of Ontario. Agents are obligated to work in the best interests of their clients. Some existing rules protect buyers in a multiple offer situation. For example, realtors must present offers in writing, and brokerages must disclose the number of competing offers, but the price and other conditions cannot be disclosed.