The housing market in British Columbia is hot right now thanks to fallen interest rates. As such, the bidding process is being scrutinized to see how it can be changed to temper these price increases. The new normal on the property market is multiple offers which drives selling prices far above a seller’s asking price.
There are now discussions being held about how the bidding process can be changed. This, in an effort to temper price increases. The real estate system in British Columbia is quite opaque. And so, homebuyers rely on the information about offers that are provided by the seller’s agent. So a buyer really has no idea what is going on in the back end. What this means is that an unscrupulous realtor can sway things in their favor. We are not saying that this is happening nor that it is happening often, but we know that the potential is there.
You never really know in actuality how many offers have been submitted. So, if a realtor tells you “we have shown this property 20 times” you may want to put in a higher bid. You will want to do this as you may feel like the competition is high. When in reality, 20 people viewing a property does not mean 20 offers were made. It also doesn’t mean that all the offers made were done at the asking price or higher.
What is the Bidding Process Like in Other Provinces?
In Ontario, there is more transparency in the process. Sellers file offers to a public registry so buyers can see just how many offers have been made on a property. You still are unable to see the terms and prices of an offer. But at least it still gives you a better look at the property listing and how it is performing.
Suggestions for a New Bidding Process
Most bidding websites use an “automatic step-up clause” system. This allows bidders to set a maximum bid and bidding occurs in specific increments. This type of system could help to temper the blind bidding we see being done in the market today.
One example recently tweeted showed how one house got two offers. One was at asking price and the other was $175,000 over asking price. In this case we can see how an automatic step-up clause system could prevent such a huge jump. If the bid amount was set up in increments of $5000, the successful buyer would not have had to spend so much extra money on this one property. And in turn, the property prices of other sale units in the area would not be affected.
Now that borrowing is cheaper for buyers, they can afford more than they could in previous years. With the growing concern about the pandemic, more people want to find that home that really meets the needs of their families while keeping them safe. So buyers are motivated once they can afford a property. But what about those who have been negatively impacted by the pandemic and are now having to deal with living with less income? As prices increase, their dreams of owning a home fade day by day.
Benefits of More Transparency for the Offer Process
Allowing more transparency in the offer process could help some people still have the ability to afford a home during this time. In our current market, you only have the seller’s word and that is what you have to take. Sellers can even fudge the numbers, so they can increase demand.
With this type of behavior in the market, more and more sellers are expecting to get higher prices for their properties. And this creates a double standard of sorts. When agents are working with the buyer they want transparency but when they are working with the seller they want the reverse.
How Can Changing the Process Help?
Changing the process can help everyone. Most sellers go back into the market as buyers. And then they will want to benefit from a more transparent process.
Arm yourself with the knowledge of your rights as a buyer. The Real Estate Council of B.C states that buyers and buyers agents can inquire about the number of offers or how their offer compares to others when there are multiple bids. All brokerages must maintain records about submitted offers, so the information is there if there is an investigation or audit.
Ask for this information as a buyer so you can make an informed choice when trying to purchase a home.
How SilverBeam Homes Can Help
At the end of the day, if you find yourself in a situation where you simply cannot afford homes on the market, contact us. Here at SilverBeam Homes, we may just have what you need. Let us help you to build your home from the ground up according to your needs and to match your budget. Don’t know where to start? That’s OK, we can set you in the right direction and refer you to different professionals within our network for all your home buying needs.