Local real estate agents not sold on new real estate legislation

‘I see the benefits of it. I also see a lot of problems with it as well,’ says long-time local real estate agent of changes around bidding process

New real estate rules, implemented last month, may provide more transparency during the bidding process often involved in the purchase of a home.

Previously, the “blind” bidding process didn’t allow for relators to reveal bidding information to prospective buyers. The Trusted in Real Estate Services Act now provides sellers an option to reveal information about the offers they get.

Jack Latimer, a long-time Orillia real estate agent with RE/MAX, says the new law offer pros and cons.

“A couple of years ago when real estate was going totally crazy, people were putting in all kinds of offers in way above what they may have got the house for if they knew what other bidders were putting in on the home,” he explained.

In some cases, buyers were putting in bids for $50,000 to $100,000 over the asking price when the second bidder below them might have only been $25,000 over.

“In a sense, this does help the buyer because they can know what the other party is bidding,” Latimer said. “It may eliminate them from putting in too high of an offer when they can get the house at a price they would accept.”

Buyers also now have the option of keeping their bid private, which Latimer says can defeat the whole process.

“Buyers may still go well over the price because of one buyer not wanting their information to be revealed,” he said.

Latimer says it’s going to take some time for real estate agents to work out the “bumps in the road” of the new process.

“I don’t think the experts who put this together are fully aware of everything that is going to materialize,” he said. “I think there is going to be some smoothing out of it over time.”

Latimer says most sellers will feel that they can get a higher offer without the open bidding process. However, in a slower market, it may be a good idea to reveal bids to get the process moving.

“I see the benefits of it,” Latimer said. “I also see a lot of problems with it as well.”

The reason for the new law comes from buyers paying “way too much” for their homes over the last few years, he explained of the genesis behind the new rules.

“It’s to protect buyers and, in some cases, sellers,” Latimer said. “It’s a good thing in aspects, but there is a whole lot to still be learned about this process.”

Latimer believes it’s going to take some unfortunate mistakes to help smooth over the laws.

“Some seller is going to reveal all offers when they could have got more if it wasn’t revealed,” he said.

Latimer doesn’t believe the new laws will do anything to help with the current housing crisis. That issue is about supply and demand and interest rates.

“Real estate prices of homes really haven’t fallen a huge amount,” Latimer said. “Some people think the sky is going to fall, and realistically, I don’t really see a lull.”

Latimer says we’ve moved into a more balanced real estate market over the past several months.

“On a positive note, it doesn’t seem like interest rates are going to continue to climb significantly,” he said. “There could be another slight increase in the coming months, but the way it seems now, it’s kind of levelled out.”

Latimer expects the more balanced market to be a good thing for both buyers and sellers.

“I think we are going to be in that for the first six months this year,” he said. “After that, it all depends on inventory.”

If the inventory of homes remains low, Latimer says we could move into a slower market, but prices shouldn’t change dramatically.

Christopher Marinakos, Orillia real estate agent with Century 21, doesn’t think the new law is either a positive or negative thing for buyers, sellers, or real estate agents.

“It won’t change much in the real estate market,” he said. “Not positive nor negative to buyers and sellers because it’s not mandatory. They still have the option to opt in.”

Marinakos says he doesn’t anticipate a “big market swing” because of the new law.

“I don’t think open bidding will help or hurt the housing crisis,” he said. “I think interest rates have a big part of that. I think what they are trying to do is bring down housing prices and over-asking offers to sellers.”

Marinakos says home prices have recently softened, and he is seeing “light at the end of the tunnel” for potential buyers.

“Some people are predicting a cut to interest rates in the summertime,” he said. “I think the next six months are certainly going to be something we need to get through in order to see.”

Marinakos says people are still chomping at the bit to live in Orillia.

“It’s a growing city,” he said. “It’s a great city to raise a family in and it’s a great community to be a part of.”

Jordan Rossman, Orillia real estate agent with The Rossman Team, says the new law comes at a time when properties in the Orillia area aren’t getting multiple offers.

Jordan Rossman, a real estate agent with The Rossman Team, says it’s unlikely that most people will take advantage of the new provincial rules. Supplied photo

“Agents haven’t really been able to see this in practice yet,” he said. “In the new listings that we’ve signed, people are not opting into it.”

Rossman says it’s very rare in the current market for a seller to receive multiple offers.

“People are generally happy if they can just get one offer,” he said. “In this short time, none of our clients have had to opt in or have had to even consider this as an option.”

If the market heats up, Rossman says there will be more discussion with clients about what strategy they would like to go with.

“It’s important to note that they can change their mind in the middle of the process,” he said. “They can initially opt-in, and then decide halfway through the offer process, to then opt-out.”

Rossman says buyers and sellers must opt into the new law to make the process work.

“My suspicion is they probably won’t,” he said. “In my experience, people in real estate tend to defer to what they’ve always known.”

The new open bidding process can be uncomfortable for both buyers and sellers, Rossman says.

“They’ve never done this before in this scenario,” he said. “They defer to what they understand, what their friends and family who are in their ear understand, and so my suspicion is a lot of people won’t opt-in.”

As for Rossman’s forecast, he says 2024 will be a good year for real estate.

“November and December were exceptionally slow,” he said. “It seems like buyer activity is picking up now and there is a lot of talk about interest rates dropping this year multiple times.”

If the interest rates drop, and home prices stay the same for a short time, there will be a “feeding frenzy,” Rossman says.

“The market was slow in 2023, but the demand from homes didn’t leave,” he said. “All of the people who got priced out of the market because of interest rates are all still sitting on the sidelines wanting to buy a home.”