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Would an end to blind bidding help Canadian home buyers? - YouTube
Channel: CBC News: The National
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[Reporter] This townhome is getting ready for聽sale
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and so far, it's a familiar scene.
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Stagers prep the place.
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Home聽inspectors look for trouble.
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The photographer waits for just the right light.
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But there's one major difference about the sale of this home.
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[Daniel Steinfeld] This property is going to be going聽up for an open auction
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which is for all intents and purposes the same as what people are used聽to
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with the one big difference being that all the bids are transparent.
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So this has been聽a transformation already.
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[Reporter] Real estate agent Daniel Steinfeld is an industry veteran
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but a few聽years ago he started questioning the status quo.
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[Steinfeld] The rule in organized real estate in Ontario
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is聽that the real estate profession can't let anybody else know
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what other people are bidding.
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[Steinfeld] Good聽morning --
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[Reporter] So he decided to get around the system by becoming an auctioneer.
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I am co-founder and聽broker from On The Block Realty
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and On The Block Auctions.
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This is where the auction itself will聽take place.
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You're able to see what the current price is
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then when any other bids or offers come聽in
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you know how high you need to go.
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[Reporter] Steinfeld's not the only one who's been thinking about this聽issue.
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It's not fair that issues like blind bidding
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are so heartbreaking for so many families.
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[Reporter] This聽past election, the Liberals made a ban on blind bidding
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part of their housing platform
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promising聽more affordability and more transparency.
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But what would an end to blind bidding look聽like?
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We're going to dig a little deeper, starting with the issue of affordability.
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How聽difficult is it to really get into what matters and
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how this all works when it's such an emotional聽thing?
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[Murtaza Haider] It is an emotional thing, buying and --
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[Reporter] Murtaza Haider is a researcher of Data Science and Real聽Estate.
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He says our housing market is in crisis.
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On a per capita basis, we are building half as many聽homes now
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as we were building in the early 70s.
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[Reporter] But a ban on blind bidding could help.
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When a聽house sells via blind bidding, a hopeful buyer could unknowingly bid
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tens of thousands more聽than the second highest bidder
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and push up the price for the entire surrounding neighborhood
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and by removing it, you could just take that extra little heat
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out of every little market聽across --
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Absolutely, so you will remove a higher volatility
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you will add more stability聽in the market.
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[Jeanhie Park] My daughter put this video together.
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[Reporter] Jeanhie Park's on board with the idea of more transparency.
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[Park] So this is a video of the exterior of the cottage.
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[Reporter] You guys out on the lake?
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[Park] Those are my kids, those聽are my girls.
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[Reporter] This spring, Jeanhie and her family went hunting for a cottage
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just like throngs of聽others looking to escape the city.
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There were a lot of properties we were interested in
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unfortunately聽we got outbid.
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[Reporter] They'd already lost four blind bidding wars
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so weren't surprised when their agent聽
told them they'll be
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competing on this cottage, too.
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So how much over listing were you advised to bid聽that night?
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A couple hundred thousand.
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Over list.
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We just went a little bit over, just聽because we wanted
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to get that property.
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[Reporter] Turned out, there were no other bids,
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We felt duped and聽manipulated.
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The fact that there were zero registered offers
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that we were misled with false聽
information in order for us
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to put in our top price.
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You paid $230,000 more than you felt you聽should have
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I think is just--
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Mind-boggling, I know, I know.
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We're having to pay for this while she gets a big fat paycheck.
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[Reporter] Jeanhie filed a complaint with Ontario's real聽estate regulator.
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I do have footage where she does admit to another registered offer.
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[Reporter] She even聽submitted a recording she believes proves her case.
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Two offers, she says.
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You believe the offer was [$333K]?
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[Reporter] We reached out to the realtor as well
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but she聽won't comment while the investigation is open.
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So even if this investigation finds in your聽favour, what happens?
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Well they're not going to reduce the price that we paid for
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and they're聽certainly not going to pay for my mortgage
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and I think there's little that's going聽
to be done against this agent.
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Do you think
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blind bidding should be banned outright?
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Absolutely.
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100 per cent.
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[Reporter] And she's not alone.
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A poll by CBC found the majority of Canadians want a ban on blind bidding
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less than a quarter support the status quo.
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David, thank you for doing this really--
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the real estate industry is pushing back.
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The seller who is the homeowner should have that right
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to decide how they want to sell.
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[Reporter] David Oikle leads the Ontario Real Estate聽Association.
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To what extent is it in fact rigged
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in the favour of the sellers against the聽
buyer?
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We're certainly in a seller's market but it needs to be something
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that is聽important you know in all markets in all circumstances.
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[Reporter] Besides, he says this聽proposal would barely address affordability.
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Australia and New Zealand have auctions
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prices聽have gone up there because, you know, auction fever.
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I don't think this is -- addresses a problem and聽creates additional ones.
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We've got a beautiful day for an auction here, let's get the show on the road.
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[Reporter] In Australia, bidding wars are fully transparent.
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Right out on the street transparent
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where houses聽are sold in open auctions.
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[Auctioneer] You better be the one holding that very last bid.
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[Reporter] But just like here in Canada
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Australian home prices are way up this year.
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I think that that's going off of a very聽
narrow-sided view
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of what auctions are and how they operate.
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[Auctioneer] At 920, 40 I have now, 60 can I make it, sir --
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That high emotion, looking at people bidding against you
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and maybe doing things that聽are outside of your means
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is not the model that we have.
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It's an online model, it allows people to聽
do their research
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for days or weeks ahead of time.
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[Reporter] And when auction night comes, it's all in聽front of them
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at the click of a button.
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So the auction has just now opened, all the bidders have聽pre-registered.
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Now they've logged in and we're all just waiting for the first bid to come in
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and we聽now have one bid $1,000 over asking
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and now everybody else has to just wait and see how聽they'll react
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what happens to the price going from here.
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And unlike Australia, none of the bidders
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can actually see who the others are.
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Why can't you just say, yeah, sure you want to sell your house聽that way
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and these people want to buy it that way, we're going to help facilitate it
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and we'll take聽our cut and everybody can be happy.
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The consumer gets to decide if they want to sell it
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with or聽without representation.
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[Reporter] Bottom line, if you want transparent bidding
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you'll have to choose to do it聽without a traditional realtor.
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But when you break it down, the choice may not be so clear.
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In Ontario alone, there are more than 80,000 real estate agents
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who only sell via blind bidding
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but only聽a couple of auction houses focused on real estate.
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For Haider, the answer is simple.
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I think the聽best thing is to go back to the municipal, provincial regulators
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and say is your current practice聽
guaranteeing fairness
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protecting the rights of sellers and buyers alike
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but if it's not then聽let's build transparency and trust
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because that's what the industry relies on.
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[Reporter] And as always, it聽relies on bringing buyers and sellers together
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whether in a heated bidding war or not.
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Okay, so the clock's run out, but we only had that one bid come in
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so now everything defaults to聽a more traditional sale
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between the buyer and the homeowner.
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So even with a more transparent聽
process, the house sold
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buyer and seller are happy
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and at the end of the day, Daniel still got to聽hang one of these.
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Peter Armstrong, CBC News, Toronto.
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