I don’t believe anyone would argue that Vancouver is known for its typically escalating housing prices. Low interest rates are to thank for this new norm of multiple offers with properties selling far above asking price.
Not too long ago, I sold a home that received just two offers. One was barely over asking, with the second nearly 100,000 over the asking price!
This begs the question of what can be done to temper the escalation in prices for Canadians. Currently, the system in BC is not very transparent, as homebuyers rely entirely on the seller’s agent for information on how many other offers there might be. Basically, homebuyers are left in the dark, having no option other than to take the seller’s word. So unfortunately, this allows for the possibility of unscrupulatory realtors. However, brokerages do have an obligation to retain records of each offer submitted, so that during an audit or investigation they may be verified.
In Ontario, offers must be filed to a public registry. This way, a potential buyer is able to see how many offers have been placed. Price and terms aren’t included.
I feel that many in the industry would agree that the multiple offer process lacks transparency. The president of research firm North Cove Advisors, Ben Rabidoux, recommends an implementation of a simple mechanism found on many online auction sites, called an “automatic step-up clause.” In an environment where it is cheap for buyers to borrow money, this step could help minimize the blind bidding of prices due to the lack of indicators to guide them.
What do you think about BC’s current bidding process? Feel free to share your thoughts below.