OTTAWA — Some real estate experts and would-be homebuyers are calling for an end to “blind bidding” as a way of cooling what they say is an unsustainable housing market.
Karen Scutt is in the market for a new home in Toronto and placed an offer $100,000 above the asking price of a $1.8-million home, only to find out within minutes that she was out of the running as someone had bid upwards of $400,000 more than the asking price.“They’re pricing the houses so much under what they want that even if the listing is in your range, you’re already resolved that you’re not going to get it,” she told CTV News. When she was placing a bid on the home, Scutt was told that there were six other bidders, but wasn’t told who they were or how much they had bid.
This process is referred to as “blind bidding,” and the lack of transparency can lead to properties being sold for thousands of dollars more than they need to be.
For example, if there are three bidders looking at a home, one could bid at the asking price, one could bid $5,000 more than the asking price and the third could bid $25,000 more than the asking price. Without knowing what the other bidders offered, the third bidder essentially paid $19,000 more than what would have sold them the house.
Blind bidding is becoming more common in Canada but has concerned some economists, who believe the housing market is overheating and becoming unsustainable.
“We think that if we’re going to have an auction process that should be transparent and open to all bidders,” said Douglas Porter, chief economist at the Bank of Montreal.
In Australia, the preferred method of home sales includes an auction outside the home on a predetermined date. With this method, potential homebuyers can see who else is bidding and exactly how much they’re
offering……..
Source:aljazeera.com
