How does the Trust In Real Estate Services Act (TRESA) impact auctions?
There are several important changes to the regulations that govern real estate professionals that can have an impact on the auction process. Ultimately, none will change the process itself, but given the requirement of this platform to have all auctions listed by licensed real estate professionals, the process and the participation of buyers and sellers must take into account the new rules to ensure everything is fully compliant with TRESA.
1) Self Represented Parties (SRPs)
Under TRESA, individuals wishing to transact in real estate but who choose not to be represented by a licensed real estate professional are deemed 'self represented parties'. They are not privy to the advice or services of a real estate professional, and as such are left to make decisions without any outside guidance. Theauctions.ca does allow for self represented parties to participate as bidders in auctions, however they must be aware of the distinction between being a client and being an SRP.
On registration, individuals will be asked if they are represented by a real estate professional and will be asked to identify them. If an individual chooses not to be represented, there will be further information provided about what that means to their experience. On every auction listing page, information will be provided to explain the bidding process for both clients and SRPs, and the 'RECO Information Guide' will be available for download on every auction as well. SRPs will be encouraged to reach out directly to the listing agent in advance of bidding.
2) Open Bidding
Under TRESA, the ability for sellers to disclose different elements of an offer's contents was introduced. This means that sellers can now opt to let potential buyers know elements of competing offers if they choose. The auction process is one such avenue a seller may choose to allow for the details of offers to be transparent.
Any seller opting to use the auction platform will, as part of their listing process with their listing brokerage, consent to the disclosure of the details of competing offers in accordance with TRESA. While TRESA does not expressly prohibit a seller's ability to change their mind about the disclosure of competing offers, theauctions.ca does not allow for the transparency of an auction to be 'switched off' once bidding has begun. The leading bid and historical bids will all be transparent for all participants throughout the auction process, and the additional terms of auctions are standard for all bidders, making elements like deposit amount, closing date and conditions transparent as well.
It is possible that certain auction listings may allow for pre-emptive offers that are received prior to the opening of bidding. In the event of such an allowance, the transparency of any such offers will be subject to the Listing Agreement and direction of the seller to their listing brokerage.