Ottawa-based real estate auction marketplace Unreserved has agreed to dismiss its defamation lawsuit against certain Canadian real estate associations.
Speaking with BetaKit, Unreserved founder Ryan O’Connor said that the startup dropped its $25 million lawsuit against the Canadian Real Estate Association (CREA) and the Ontario Real Estate Association (OREA). However, the lawsuit remains active against the Ottawa Real Estate Board.
“Litigation with the boards was something that nobody wanted.”
– Ryan O’Connor, Unreserved
Unreserved’s dismissal of the lawsuit comes amid a new regulation in Ontario that will allow property sellers the option of disclosing competing offers, a practice known as “open bidding.” Open bidding is what Unreserved’s real estate auction marketplace offers, and is what originally led to part of the tension between the startup and real estate boards. Ontario’s open bidding regulation was set take effect within the province on April 1 this year, but has yet to be implemented
Ahead of the regulation being enforced in Ontario, Realtor.ca announced that it will offer an open offer system nationwide in partnership with the CREA. Storeys reported that the platform will provide visibility into real-time offers on a property’s listing on Realtor.ca, but the amount of details will vary depending on the seller’s preferences and location. For example, in Ontario, the Real Estate Brokers Act prohibits realtors from revealing the dollar amount, however it’s allowed in British Columbia.
Unreserved’s real estate marketplace functions through open bidding, allowing buyers to bid on homes online, in real-time. In its lawsuit, Unreserved argued that the trio of Canadian real estate associations it sued were attempting to make it appear that the buying or selling of properties on auction platforms is dangerous and not transparent for consumers.
O’Connor told BetaKit last year that his goal was to make home buying transparent. “Traditional real estate would not be what we would brainstorm and come up with together – it would be something transparent,” he argued. “And that’s all we’re fighting for.”
As regulations change in Unreserved’s favour and after dismissing the case against all but the Ottawa Real Estate Board, O’Connor told BetaKit, “litigation with the boards was something that nobody wanted. We’re happy to discontinue the claim with OREA and CREA.”
He added that while the claim against the Ottawa Real Estate Board is still unsettled, “we are looking forward to resolving our issues and moving past this” with their new president—who replaced Penny Torontow, president of the Ottawa Real Estate Board at the time the lawsuit was filed.
As it awaits the new regulations, Unreserved put a hold on its auctions sales business, as reported by The Ottawa Citizen. O’Connor told BetaKit that the pause is due Unreserved waiting for the open bidding regulation to come into play.
In the meantime, Unreserved continues to hold off on auction sales of homes. However as a registered real estate brokerage the startup continues to list and offer homes through more traditional sale methods for now. O’Connor said he expects Unreserved to resume property auctions this month once open bidding is officially allowed in Ontario.
“With the province changing the laws to now allow for open bidding we’re proud to say that we helped expedite this change,” O’Connor told BetaKit,adding that Unreserved is now fully compliant as a proptech brokerage with around 20 realtors in Ontario.
O’Connor also said that Unreserved looked at becoming a brokerage when it first launched but “unfortunately, realtors at the time were bound to blind bidding as the only option to them.”
“When Unreserved launched many realtors and brokerages voiced their concerns to the boards,” O’Connor said. “They felt Unreserved had an unfair advantage and all everyone wanted was an equal playing field.”
Launched in 2021 by O’Connor, who also founded E Inc., Unreserved claims it is able to remove blind-bidding and bully offers in the process of purchasing homes. In an interview with BetaKit in January 2022 when the company raised a $33.85 million CAD seed round, O’Connor said that Unreserved is meant to bring more transparency to the process for buyers and sellers alike.
Even as regulation brings potential positive changes for the startup, Unreserved has not been insulated from the volatile real estate market as it braces through more costly borrowing due to rising interest rates and inflation among other macroeconomic variables.
In a statement to the Ottawa Citizen, O’Connor said that Unreserved made layoffs over the last year, “like a lot of real estate companies.” The Citizen reported that Unreserved once had a workforce of 150 employees, which is now down to about 70.
Featured image courtesy Unreserved