In the U.S., they call the voting for the Democratic Leadership nomination between Obama and Clinton “Super Tuesdays”. In our office this has also become a special day as we have renamed it “Super Offer Tuesdays”. Our office is full of agents preparing offers for tonight. Over the past few years Tuesday has become the day that many Realtors and their Sellers have chosen to review offers placed on their property. With the limited supply of listings and multiple offers still a normal occurrence, is it time to consider Auctions for Real Estate in Toronto?? It has been a topic that I shared with many of our sales associates and the procedure intrigues us all. I knew auctions existed for many years and is standard practice in the U.S. I recently attended the RE/MAX convention and met many wonderful RE/MAX Realtors from around the world. They attended from as far as Australia where auctions are common practice. I spent considerable time exploring and asking many questions about the entire process and asked them about the pros and cons of dealing with offers this way.
There seems to be many benefits to the auction as it eliminates many of the current concerns of the Buyer client in today’s market. Most of the complaints that we receive in our Brokerage is not from the client being unhappy with their/ our agent but rather the feelings of losing out in multiple offer situations and not knowing how to bid. Gone are the days when an agent would list a property for sale at a price that would allow the Buyer to wiggle the price downward. It has become common practice to now place a home on the MLS (Multiple Listing Service) with what we term a “marketing price”.
This is how auctions work:
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The Seller calls a Realtor to perform and evaluation and discusses the marketing of the home;
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Auctioneer is retained by the Realtor and this fee is usually paid by the Buyer as added to the purchase price. There are many other variations of the fee payment as well;
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The Seller sets all his terms as well as a reserve price (based on the evaluation provided by the Realtor) that only the Seller knows and informs the Listing Realtor on the day of the auction;
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The Realtor markets the property for a period of 21-30 days and informs the potential buyers and their agents that the auction will be conducted on a certain day and time;
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The Buyer’s agent finds a home for the Buyer and takes the time with the Buyer to perform the due diligence before the auction. This would include advising for a inspection, evaluation and financing approval;
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On the day of the auction, there is open bidding and the best price wins. All offers are presented with certified deposits and all the offers are firm.
There are many good points to the process for both Buyers and Sellers. The buyer knows that they didn’t overpay by as much as $10,000-$50,000 more then the next best offer and the Seller knows that any offer is firm with no contingencies. I wonder who will be the first agent to try the auction process here??
Tim Syrianos
RE/MAX Ultimate Realty Inc., Brokerage
Filed under: Home Seller tips, Toronto Market Watch Tagged: | Home Buyer tips, Home Seller tips, Real Estate Statistics, Toronto Market Watch, Toronto Real Estate Update
