March 9, 2017
Going Once, Going Twice… Should You Sell Your Home by Auction?
Traditionally, the way you sold a home in Canada was to meet with a real estate agent, determine a price, put up a lawn sign, hold a couple open houses, and wait for someone to offer you the amount you were looking for.
More recently, the trend has been to announce an “offer date” where you required any interested would-be buyers to submit their offers by a certain time on a certain day.
But there’s a third option for offloading your home: selling it via an open auction.
Every day, all around the world, everything from cows to luxury cars are sold at auction. And, in some countries, including the U.K., Australia, and New Zealand, selling homes by auction is also common practice.
Not Very Common in Canada
Some Canadian properties are sold at auction, but more often than not the seller is a bank or municipality that’s foreclosed on a property for being in arrears and wants to sell as quickly and transparently as possible.
A New Zealand-based real estate brokerage, Harcourts, is trying to make real estate options more popular in Canada. Last July, they opened Harcourts Canada in Vancouver.
“In New Zealand [selling via auction] has become very mainstream, particularly in the urban centres,” says Hayden Duncan, CEO of Harcourts Canada. A major advantage for buyers is that rather than bidding blindly against unseen adversaries, all bids are made in a public forum.
How Real Estate Auctions Work
Harcourts posts their listings three weeks ahead of the auction date, and requires would-be bidders to register in advance. Once registered, they get access to an online database with all the details and related documents. The sellers set a minimum price, or reserve, but that information is not made public.
On March 2, Harcourts held their first real Canadian estate auction in a ballroom at Vancouver’s Pan Pacific hotel. “Think of a fine art auction. That’s the environment people can expect for a Harcourts real estate auction,” says Duncan. Other realtors have held auctions on the site of the property being sold.
The property on auction was a two-bedroom Vancouver condo in the suburb of New Westminster. (There was supposed to be a second auction of a luxury condo in trendy False Creek at the same time, but the buyers decided to pull it off the market.)
A New Way to Market a Listing
The uniqueness of the event garnered coverage in the local media, which lead to more than 70 viewings of the property and 8,500 online views, making it one of the top five most-searched listings in the province at the time.
While there were multiple bids, the highest offer made – $470,000 – didn’t meet the reserve, so the house is still for sale.
“Overall, we were happy with the way it went. The feedback from the seller was positive and the buyers said they felt very informed and didn’t feel rushed,” says Duncan. He points out that in the short time Harcourts has operated in Canada, they’ve conducted $25-million in sales, all via the traditional route.
Another agent in Burnaby tried to sell a home by auction last year but it there was only one offer made and it didn’t meet the seller’s reserve. “Maybe people weren’t ready for it,” the listing agent, Greg Klemke, told the Vancouver Sun in a recent interview.
If you’re interested in bidding on a house, Harcourts is holding its next auction, with four separate properties for sale on April 13. Listing details will be posted online in late March.