A B.C. real estate group is holding a rare public auction for property, looking to sell a two-bedroom unit in New Westminster.
Harcourts Canada will hold the auction, its first in Canada, on March 2.
CEO Harden Duncan says housing auctions provide full transparency, unlike the current method of buying and selling homes where potential buyers are left blind to other bids.
"Particularly here in Canada, there is a crying out for transparency," said Duncan.
"We have an alternative option for people that want to drive transparency as a seller, make sure they're getting the best price in the market. And secondly for buyers, not missing out by $1,000 or $5,000 when they're bidding blind on a multi-offer situation."
Housing auctions are a common way of buying and selling homes in places like New Zealand and Australia, But an anomaly in British Columbia.
Poor track record
Auctions have been attempted before in B.C., but have failed to gain traction.
Duncan says part of the reason is that many people associate auctions with foreclosures or distressed sales. He says his real estate agents are trying to shake that stigma.
Duncan also believes housing auctions have flopped because people don't understand and are intimidated by what he terms a "foreign process."
"It's got to be really crystal clear and there's got to be a lot of support and information to help them every step of the way to get to a point that they're very confident and know the value of what they're bidding on. I think that was lacking."
Duncan says real estate agents help prepare sellers for what they need to do before the auction date.
Buyers have to follow some steps before the auction date:
- Check out the home (through an appointment, usually with a Realtor).
- Potential buyers then have to pre-register online for the auction.
- They then receive documentation on the property for sale.
- Realtors recommend sharing that document with a lawyer, accountant or mortgage broker to do as much homework on the property as possible.
- Set a limit for yourself on what you're willing to bid for the home.
Bad timing for auction
SFU finance professor Andrey Pavlov questions whether the timing is right to reintroduce auctions to Metro Vancouver because of the area's cooling market.
"I'm surprised at the timing," said Pavlov. "My impression is that bidding wars are pretty rare at the moment. Most Vancouver properties are now selling at a discount."
Pavlov thinks that the transparency of the process is a major bonus for prospective buyers, but adds that he's not a fan of some aspects of the sales strategy.
"The whole process is designed to create a feeding frenzy when people make quick and potentially irrational decisions," said Pavlov.
"So as long as there is order to the process and there's enough time for people to stop back and consider the bids they're placing, I think a bidding process would be [great]."