Last week, a Scarborough home sold in a live, online, open auction. Everyone including bidders and spectators could see the bids coming in and the price increasing. It’s basically the most transparent way of selling a home, and both the buyer and seller were reportedly happy with the process and transaction.
On The Block Realty developed the auction platform. The listing had a number of viewings before the auction date, and in their release, they say people were receptive and interested in the open auction bidding process.
The detached bungalow at 6 Mozart Ave. received a total of 45 bids from nearly a dozen bidders. Hundreds of people watched the auction as the bids increased by $2,000 at a time. The opening bid was for $650,000 and there was a reserve price set at $675,000. When bidding hit the reserve price, everyone was notified.
“Several people were registered to bid, but saw the price go past their comfort level and didn’t even have to place a bid because they knew the price was too high for them,” reads the release. “At no point was there uncertainty about what to offer or when, as the bidding continued until only one buyer remained.”
The home ended up selling for $743,000, and as per auction terms, the paperwork was signed the same evening. The beauty of this process is people who are interested can participate, but as soon as they see the price exceed their budget, they can simply walk away from the property. There’s no time wasted going back and forth between the real estate agents, participating in a blind bidding war, not knowing the best ways to improve your offer.
This process also eliminated a lot of waiting time. When you submit your best offer, it usually takes a few hours or even a day. During this time, you can’t make any other offers on other properties in case your offer gets accepted. With an open auction, you can start looking at different properties as soon as the price exceeds what you’re willing to spend.
Recently, the Ontario Real Estate Association recommended making changes to the Real Estate and Business Brokers Act in order to make the bidding process even more transparent by allowing the sharing of additional details like closing dates and other conditions.
“My opinion, full transparency is always better, especially when it comes to the largest purchase you’ll ever make in your life,” says Sam Reiss, President of New Home Buyers Network. “You shouldn’t have to waste time in a bidding war when it’s obvious to the seller that you can’t match the leading offer.”
If OREA has their way and platforms like the one On The Block Realty developed become more popular, we could see more real estate transactions being conducted in this manner. This could make a huge impact on the resale market.