We’ve always said that the housing market and its participants would benefit from more transparency, and it looks like open auctions are catching on in the Greater Toronto Area.
Near the end of 2018, On The Block Realty made headlines after a Scarborough home sold for nearly $70,000 over asking in a live, online, open auction. Bidding started at $650,000, the reserve price was $675,000, and bids increased by $2,000 increments.
Recently, On The Block Realty announced that 10 properties have been listed via their online, open auction process, and there are two new listings coming soon, including a two-bedroom condo in East Toronto and a three-bedroom townhome in Brampton.
“Transparency is pivotal to ensuring buyers are confident with the real estate process,” says Daniel Steinfeld, co-owner of On The Block. “When people can see the price they need to pay, they are more likely to participate, and they won’t miss out on a property for which they may have otherwise under-offered.”
The latest auction had 45 bids and more than 500 spectators. On The Block says that realtors who are bidding on behalf of clients find the process more comfortable than a traditional bidding war because you always know the highest offer. In a traditional bidding war in the resale market, you never know the details of any other offers.
When the online auction starts, a reserve price is set, and everyone knows what it is and is informed of when it is met. Like in most open auctions, the reserve price is the lowest price the seller is willing to accept.
If you’re planning on spectating one of the upcoming auctions and then throwing in a bid at the very last second in an effort to beat out your competitors - you should rethink your strategy. For any last minute bid, five minutes will be added to give everyone else an opportunity to decide whether or not they want to bid again.
Times are changing. The Ontario Real Estate Association is calling for a more transparent bidding process. Earlier this year, a company called HonestDoor launched in Edmonton, which you can use to see a property’s sold data and even an estimated current value. The company has plans to expand to Toronto.
A more transparent buying process could go a long way to balancing the GTA’s resale housing market and make the overall experience more enjoyable. Imagine if all resale transactions were open auctions, and you knew the conditions and details of every other offer, and had the ability to access all this information without a real estate agent.
That’s not to say real estate agents will no longer be necessary in the near future. When it comes to Sales Agreements and all the other paperwork and tight timelines to meet when buying or selling a home, having a real estate agent is essential.
We’re interested to see if more brokerages start conducting live, online, open auctions for their listings!