HOME ON THE BLOCK

Bro­ker­age em­ploy­ing a ‘selling-by-auc­tion’ tech­nique

24 Hours Toronto - - NEWS - JENNY YUEN

It’s like ebay, but for Toronto real es­tate.

On The Block, a Vaughan real es­tate bro­ker­age is bank­ing on a new way to sell houses, which it says will make the process more trans­par­ent for buy­ers and still fetch the high­est price for sellers.

The com­pany is em­ploy­ing a “selling-by-auc­tion” tech­nique as an op­tion for clients. When a seller lists a home, it will ap­pear on MLS for about six to seven days and also on the bro­ker­age’s web­site with a count­down, let­ting peo­ple know when the auc­tion will go live. Dur­ing that time, po­ten­tial buy­ers can view the staged house and get de­tails of a home in­spec­tion.

Then, the auc­tion will go live on­line and usu­ally end af­ter three or four days with

the home go­ing to the high­est bid­der. The seller also sets a “re­serve” price to en­sure that a min­i­mum is reached.

“I’ve been in the busi­ness for 10 years and with bid­ding wars, I’ve no­ticed there’s a lack of trans­parency in know­ing what the other buy­ers are of­fer­ing,” said On The Block pres­i­dent Katie Ste­in­feld.

“That’s a big draw­back right now in the tra­di­tional sale. If they’re com­pet­ing with an­other buyer, that’s a key piece of in­for­ma­tion they don’t have and they’re re­luc­tant to go higher. If a list­ing agent tells you you’re close or far off, that’s very sub­jec­tive. By see­ing what oth­ers are of­fer­ing, it al­lows them to make a com­fort­able de­ci­sion with their of­fer.”

For sellers, Ste­in­feld added, an auc­tion pro­vides knowl­edge that ev­ery buyer has maxed out on the price they’re com­fort­able of­fer­ing

for the home.

“They’ve got con­trol through the process,” she said. “Rather than tak­ing of­fers within the first cou­ple days of list­ing and not know­ing if they would have got­ten a higher of­fer, this model al­lows their home to be mar­keted

for a suf­fi­cient amount of time be­fore re­view­ing of­fers.”

Ac­cord­ing to Forbes, 20% of Aus­tralian home sales were com­pleted by auc­tion from Septem­ber 2014 to Septem­ber 2015. Auc­tions have also been pop­u­lar in

the U.K.

But while the On­tario Real Es­tate As­so­ci­a­tion (OREA) said auc­tions are an op­tion, very few peo­ple choose them be­cause peo­ple can be un­com­fort­able mak­ing the process such a pub­lic spec­ta­cle or the risk of a med­dling scam artist who may try to run up the bids.

“Auc­tions are not the an­swer to On­tario’s home af­ford­abil­ity chal­lenge,” said Tim Hu­dak, CEO of OREA.

Hu­dak sug­gested in­creas­ing sup­ply, es­pe­cially townhouses, stacked flats, and mid-rise build­ings is the best way to tackle the af­ford­abil­ity prob­lem.

“While it’s not per­fect, the closed of­fer process is

de­signed to give home buy­ers and sellers more space to make in­formed de­ci­sions,” he said. “Buy­ers have an op­por­tu­nity to put their best foot for­ward with their ini­tial of­fer and, pro­vided that of­fer is not ac­cepted, they may have an in­formed dis­cus­sion with their re­al­tor about next steps.”

Right now, On The Block’s first auc­tion — set to go live on Nov. 16 — is a condo at 37 He­len­dale Ave. The cur­rent list price is $399,000 with an op­tion to “Buy it now” at a higher set price of $450,000. The seller can’t back out of the deal once the re­serve price is reached, which of­fers some pro­tec­tion for the buyer.

Rather than tak­ing of­fers within the first cou­ple days of list­ing and not know­ing if they would have got­ten a higher of­fer, this model al­lows their home to be mar­keted for a suf­fi­cient amount of time be­fore re­view­ing of­fers.” On The Block pres­i­dent Katie Ste­in­feld

POST­MEDIA NET­WORK/FILES

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