When it comes to the real estate market, the practices and protocols are yet to embrace technology like many other sectors, including finance and transportation. While you can search for property listings online, the bidding and offer processes are often handled solely offline by realtors. These processes are old-fashioned and often disadvantageous for all parties involved. In order to improve the experience for buyers and sellers, the real estate market desperately needs to start integrating the use of modern technology.
In Ontario, there’s been growing frustration surrounding the outdated practices and the use of blind offer processes within bidding wars.
“The experience can be discouraging, a hopeful buyer competing with dozens of bidders for homes they can barely afford and repeatedly losing out,” says Tim Hudak, CEO of Ontario Real Estate Association (OREA). “They’ve lost sleep wondering whether their own bid is uncompetitive or more than they really need to pay. It’s not surprising some may wonder whether there’s a different way.”
With the goal of replacing blind bidding wars with transparent bidding, OpenBids has its sights initially set on Ontario. The platform provides a neutral space for buyers to bid on properties while having the ability to view competing bids when submitting their own offers. OpenBids is not a brokerage but a company that uses technology to infuse the real estate market with transparency and honesty.
Through the use of OpenBids, buyers can bid more confidently and sellers who register their property on the website can receive more offers. The amount of interested buyers often increases as those who traditionally strayed away from blind bidding wars now feel comfortable submitting an offer.
“The Real Estate Council of Ontario (RECO) cited that in Q1 of 2021, complaints have gone up by 38 per cent,” says Ed Wong, cofounder of OpenBids. “It’s clear that a lot of people are fed up with how the processes work. We feel that the solution we’re offering will help rectify many of these complaints and make it an even playing field for everyone involved.”
OpenBids was developed by cofounders Pavel Demeshchik and Ed Wong after having had their own disheartening experiences when purchasing their first homes.
After Wong submitted a bid for his dream property, he was quickly informed the bid was not high enough and he needed to increase his offer. Already at his maximum and unwilling to readjust the bid, Wong walked away from the bidding war.
“Once I had stated that we weren’t going to be increasing the bid, I was immediately told that we did, in fact, have the highest bid and that the property was ours.”
While Wong was thrilled that they got the property they wanted, they were left extremely confused.
“Everything happened so quickly. We were told that we weren’t the highest bidders so we were ready to walk away and then the moment we did that, we won.”
During the blind bidding process, particularly within the stressful second round of bidding, selling realtors may use unethical practices to get the seller the best price for their property. This could include coaching potential buyers to increase their offer when they already have the top bid. Occasionally, against the regulations in Ontario, selling realtors will even suggest a specific dollar amount to the buyer when it comes to increasing their bid.
With transparent bidding, an unnerving situation like this would never occur.
“When my business partner found the property that he wanted to purchase, he placed a bid and the selling realtor informed him that the offer wasn’t high enough,” says Wong. “The realtor disclosed the specific amount that the buyer wanted and it was $10,000 more. He decided to add $5,000 to the bid and he immediately won as well.”
Since the start of the pandemic, many people have been selling their homes in Toronto and moving outwards to the smaller surrounding cities. Places like Hamilton, Waterloo, Kitchener and Windsor have experienced a huge real estate boom. Right now, it’s common for properties to have more than 30 offers as the market is incredibly hot.
While properties with multiple offers will likely still continue, OpenBids is helping people feel more comfortable when navigating the homebuying experience.
“Just because things have been done a certain way for so long doesn’t mean that there isn’t a more effective and ethical way,” says Wong. “We’ve heard buyers loud and clear, repeatedly, that they prefer to avoid blind bidding wars altogether. We believe that with the introduction of technology and transparency to this market, Sellers can now receive more bids and for the first time, Buyers can now bid more confidence when making one of the biggest purchases of their lives.”
For more information or to sign up for access, visit openbids.ca.