Ask any recent homebuyers to describe their experience of searching for, offering on and purchasing a home, and chances are their responses will not be enthusiastic. While there are several factors at play that affect real estate transactions, many current issues Canadian homebuyers are facing can be boiled down to transparency, or lack thereof.

A clear view on blind bidding

The issue of blind bidding has been top of mind for Canadians for quite some time, but what is it in its most basic form and how does it affect homebuyers?

Blind bidding occurs during the negotiation phase of a real estate transaction when prospective homebuyers make an offer without knowing what the other applicants have offered. This may seem like a minor inconvenience, but the lack of transparency inherent in blind bidding can have tremendous negative consequences.

Although the Canadian real estate market has cooled slightly, affordability remains a major problem – especially when compounded by inflation. Imagine a homebuyer who is scouring the market finds the perfect property – it’s in their ideal price range and location. Now, due to blind bidding, this homebuyer needs to either bid around the asking price and risk losing out on their dream property, or offer above the asking price and risk damaging their current and future financial position.

Further, if they opt to bid above asking price without any transparency of their competition, they risk overbidding for no reason other than uncertainty. If the unknown bidders all make offers at the asking price, the one that overbid is now paying out of their price range despite a lack of any real competition.

Transparency is key

The above situation occurs due to a fundamental lack of transparency. If homebuyers know how many other potential buyers are interested and how much they are offering, realistic assessments can be made. The big and risky question marks would disappear, enabling homebuyers to save time and money by moving quickly away from untenable offer wars and never making an offer out of their price range based on fear of the unknown.

Transparency is also a boon for agents. Visibility on competition allows agents to optimize the entire real estate process for their clients – searching, offering, and buying. This reduces the amount of time spent on risky offers and gets people into homes faster and more comfortably.

Ultimately, transparency throughout the real estate transaction process saves everyone time and money, while reducing stress and costs.

Leveling the playing field

One way to achieve transparency in the industry is through technology, which offers solutions to many problems caused by outmoded processes.

Online platforms are inherently better at collecting and consolidating information from multiple sources in an accessible manner, while providing real-time updates. They present the unignorable opportunity for homebuyers and agents to view myriad crucial information, including the number of other offers, how much they offered and the current rank of offers on a property, all from their devices.

The transparency that technology can enable throughout the entire bidding process also has the potential to combat discriminatory practices.

The unfortunate reality is that bias can still hold sway over real estate transactions. A personal relationship or regressive and discriminatory view of someone’s background can unjustly influence the decision to go with one homebuyer over another, despite the applicants being identical in terms of financial status. This often happens through terms and conditions being set for some homebuyers and not others or private conversations between agents and sellers.

Again, transparency is the best tool to combat this. If everyone’s terms and conditions were visible online and prospective homebuyers’ rankings were updated in real-time, any foul play would become immediately apparent and reportable, rendering the buying process equitable for all.

Blind bidding and unjust practices are pervasive, but not insurmountable. With transparency as a baseline throughout the entire negotiation process, enabled through updated online platforms, Canadians can save time, money and stress while breaking down systemic barriers to entry.

Eric Bryant is EVP of Strategy at Openn North America Inc.