Now that we are almost a year after the implementation of the much-publicized (and much-commented on) changes to Ontario’s real estate transaction rules, perhaps it would be a good time to take a brief look to see what kind of impact they’ve had on day-to-day, boots on the ground activity.

The government’s stated objective was to “strengthen consumer protection, better educate home buyers and sellers, and enhance professionalism within the real estate services sector.” They should be commended for recognizing and trying to address some of the obvious shortcomings of industry rules and practices.

But regardless of government intentions, the fact is each and every transaction is a high-dollar, unique, and complex legal scenario with lots of moving parts. Therefore, it is simply not possible to specifically define and dictate each detail of each instance. This makes improvements to the entire thing no small task indeed. 

Before breaking down some of the individual changes and indeed to help place them into context, it would be helpful to recognize the overall direction the government was going with this legislative update. To start with look no further than the name of the legislation itself: the previous Real Estate and Business Brokers Act will now be called the Trust in Real Estate Services Act (TRESA). 

Big deal you say - it’s only a name change. Perhaps, but consider the specific words used: Trust and Services. This is a signal that the focus of the legislation going forward will be less mechanical and administrative (ie. boring and uncaring) and more about enhancing the public’s confidence in the process and the people entrusted to help them navigate through it.

Along these lines there is a more robust Code of Ethics section that specifically requires practitioners to act at all times with integrity, commit to providing quality of service, and actively address any potential conflicts of interest. Furthermore there is very strong and specific language about inducing or participating in fraud and other unlawful behaviours. It’s actually quite shameful that being honest, dealing in good faith, and not doing anything illegal, actually needs to be legislated but unfortunately too much shady stuff has crept into the industry in recent years.

So now that we understand the guiding principles that set the tone for how industry participants must govern themselves in their daily activities, what about those daily activities? What has changed and how has it helped? 

There are several notable items aimed at providing additional clarity and transparency that are important for home buyers and sellers to understand. Responsibilities related to Self-Represented Parties, Brokerage or Designated Representation, and Multiple Representation have been more clearly defined so it’s easier for buyers and sellers to understand the implications of how they interact with industry participants. As you can no doubt imagine however, it is not possible to adequately dig into each of them in one go. So for now we will start with one of the big headline grabbers: Open Bidding.

We’ve all seen those real estate shows from other parts of the world where there’s a fast talking professional auctioneer standing at the front of the room soliciting bids out loud from a collection of potential buyers. Like your typical local farm auction, it turns into a high intensity, fast-paced, frenzied situation where buyers get caught up in the emotion of winning. 

Fun and exciting right? Indeed. And it’s great entertainment. But the theory is that buyers will only pay enough to win, instead of blindly pushing up their offer well beyond what is needed. The problem is we see that bids still often get pushed well beyond initial expectations so an automatic dampening of upward price pressure does not necessarily occur. Which is the exact problem this change was intended to address. 

Closer to home, Agents in Ontario used to be prohibited by law from disclosing the terms of offers to anyone. Now however Agents can provide some or all of the other offer details to any or all of the other offerees when explicitly authorized to do so by their Seller. Theoretically this could turn into an open offer situation like on TV, but practically speaking Sellers very well could end up getting a lower sale price for their home. What happens is buyers don’t necessarily have to submit their best offer but rather one that is just good enough.

There are two key problems with this change. As noted above, the choice rests solely with the seller whether to disclose or not. If there’s a strong risk that they will ultimately get less money then why in the world would the opt for this strategy? It’s rare to come across a seller who is not first and foremost interested in the most money possible.

Furthermore this change is intended to address only a certain portion of constantly changing market conditions. During the super hot market periods of late 2016/early 2017, and 2021/2022 there were multiple offers on many of the homes for sale; there was simply that much demand combined with the low cost of money (interest rates.) The assertion was that buyers felt like they had no choice but to overpay for homes. 

But over time as the market naturally moves away from an over heated seller friendly environment to one that is more balanced or favourable to buyers, multiple offers and bidding wars are so rare that the problem went away making the legislation change unnecessary.

So genuine and admirable intentions aside, this particular change does not appear to have made much difference to how the industry works day in and day out. That said perhaps it’s too early to tell, and we’ll have wait until the next hot market frenzy to properly evaluate.

In the next edition of Realty-Wise we’ll explore how some of the other changes are impacting home buyers and sellers.

Lee Lander is the Owner & Broker of Record of Lander Realty Inc. and has lived in East Gwillimbury for over 25 years. She’s become the go-to local market expert: nobody knows EG Real Estate like Lee because nobody buys and sells more homes in EG as Lee. Reach out at Lee@LeeLander.com.