Would You Prefer An Auction Over A Bidding War?

Real estate lawThere has been much talk lately of changing the bidding war scenario of blind offers on houses to an auction format where everyone can see what the offers are. I disagree with the using the auction mentality to purchase a house. I have noticed a few houses in Toronto have gone the auction route. Some have met with success and others have not. The reason why I am against open bidding for a house is simple. I feel that with an auction for a house in Toronto, people would get carried away and allow their ego to take over and pay more for the house than they should. When people see someone raising a paddle to pay a certain amount for a house, I believe their ego will get the better of them and they will start to say things in their heads like, “well if that person can pay that much for the house, well so can I”. Time for rationale thought will disappear. When a buyer is in a blind bidding war scenario, they may not know the price but they aren’t sitting in the middle of the action and they don’t have to make a 30 second decision to spend more money.

They can sit in a separate room with a spouse/friend/parent and make a rationale decision. They can take the time to think about how much they can truly afford and if they really want to purchase this house.

In an auction scenario, the ego takes over. The next day, the lucky bidder may have buyer’s remorse. As much as buyers are upset with the blind bidding war process, the open bidding environment of an auction, will create a volatile situation where buyers pay more for property then they really should. Yes buyers do need protection from themselves. Maybe they will come to realize that bidding wars aren’t so bad.