Louis Vachon, the CEO of National Bank of Canada said that the country should consider ending blind bidding to cool the nation's housing market. Blind bidding occurs when new listings are posted with 'an offer date', forcing potential buyers to virtually throw blind offers, without knowing what others have offered. In many cases these offer's are hundreds of thousands of dollars over the asking price, and in some cases they could be $100,000 over the next best offer.
Mr Vachon says the regulators should look at regulating or forbidding blind bidding to increase price transparency and make it harder for buyers to waive certain rights in their purchase offers. To make offers appealing to sellers, buyers are not only going in with a very high price, but they are also giving up rights to home inspections and removing clauses that protect them if they are unable to arrange financing for the purchase.
Mr Vachon went on to say that new policies could better protect buyers and may slow the velocity of the current real estate market. He also said that changes to mortgage underwriting criteria may be needed over the next 6-12 months as well.