Photo: Andrew Rivett/Flickr
The recent Competition Tribunal ruling ordering the Toronto Real Estate Board (TREB) to make home sale data more accessible online could lead to fewer bidding wars in Toronto, says one real estate management professor at a major university.
“Perhaps more information would mean that there might be a reduction in speculation, as we see in residential markets in Toronto and Vancouver,” says Murtaza Haider, a Ryerson University professor with a background in housing market forecasting.
“If the entire market is aware of this information then you wouldn’t have these bidding wars,” he adds.
The information Haider is referring to is historical home listing data, such as previous sale prices, which the tribunal’s ruling requires TREB to remove restrictions on.
Previously TREB had tried to limit direct access to this data to realtors who were members of a board.
After the board discovered some brokers were sharing sales info publicly online last year, it threatened to cut off their access to TREB’s multiple listing service system.
The Competition Tribunal case had been ongoing since 2011, when the Competition Bureau first sued TREB, the board has appealed the latest ruling.
While the information like previous selling prices and withdrawn listings will now be available, those looking to search for these details will need to do so through a broker’s password-protected virtual office website, or VOW.
According to the ruling, “TREB may limit members’ use to being directly related to the business of providing residential real estate brokerage services.”
Haider explains more transparency in the real estate market could keep prospective buyers from overpaying. He uses a home listed for $800,000 to demonstrate how.
“You ask yourself, ‘Is it a fair markup on a house that just sold last year for $600,000 and now they’re asking for $200,000 more?’” he says, describing a scenario in which a buyer accessed past sales data via a VOW.
“You wouldn’t feel compelled to pay the premium that the seller is asking for,” he says.
“Knowing that this information is available to you and every other potential buyer, you would not — [and] others would also not — be fooled into bidding more,” Haider says.
Ara Mamourian, a broker/owner at Spring Realty Inc, which is planning to launch a database on its website allowing users to search properties by potential sale price, says that information won’t eliminate bidding wars, but will keep some would-be bidders to the sidelines.
“There’s still a severe lack of supply in the industry,” he says.
“The majority of the people that are at the offer table have legitimate offers, so I think it’s just going to eliminate a few of the ones that don’t know what they’re doing,” suggests Mamourian. “It’s going to help those people.”
The ruling doesn’t make the data instantly accessible for everyone, but Haider thinks this approach strikes the right balance between the general public interest and the interests of private enterprise.
“You have to realize that over the years, the real estate boards across Canada have made tremendous investment in developing the system,” he says.
Homeowners will also be allowed to opt out of having their sale information shared, something Mamourian is concerned about.
“If a listing agent is against this sort of thing, they’re going to urge their seller — they’re going to probably not paint best picture to the seller — and say, ‘Hey check this box. You don’t want that information out there do you?” says Mamourian.
“I think that’s going to compromise the data a little bit.”
A previous version of this story mistakenly stated that Spring Realty Inc. was working on a database allowing users to search properties by previous selling price. In fact, the database will let users search by potential selling prices, and the story has been corrected to reflect this.