One side of the real estate market is to buy a home that everyone in Toronto dislikes. It is the process whereby buyers have to go against each other to buy a home.
Bidding wars which were very prominent in Vancouver housing market has also made its way into the Toronto housing market with buyers going all out to compete with other buyers while making outrageous offers that are way above the asking prices of sellers.
Home buyers in the city are blindly trying to outrun their competitors in the market where they are not even sure of the offers made by other buyers. In most cases buyers only get to know the offers made by people they compete with but they are unaware of previous offers made by previous buyers. The housing market has become so translucent and this is adding to the pressure of buyers, and for sellers this is not an acceptable act.
Sellers often make use of several strategies to enable buyers increase on their offers such as enticing them to increase on their offer by misleading them that there are several offers that are close to theirs and as buyers are desperate to acquire homes, they in turn fall victim to the scam of sellers by increasing on their offers.
This leaves buyers in a huge dilemma to determine if a seller is genuinely speaking the truth or just wants to extort money from them.
The bullying act of sellers led the Real Estate Council of Ontario (RECO) to request sellers to maintain a detailed document of buyers and their offers and also how long their offer is valid for. This requirement came into effect in July 2015.
But the efforts of the RECO are leading them to no positive results as it is making the bidding war process worst. An example of this was the “escalation clause” which implied that for instance a buyer who makes an offer but on no account want to lose it to other bidders, a seller will propose that if the buyer does not want to lose the property, they will have to pay a certain amount extra if another buyer makes an offer higher than theirs.
Bidding wars in itself is a very stressful process and the Ontario government is trying to make changes to the Real Estate and Business Broker’s Act in order to safeguard buyers.