Buying at auction
Traditional Real Estate sales can be frustrating for buyers. In the event of multiple offers the broker is forbidden by law to disclose key details of a competing offer to a buyer. It becomes a guessing game of how much to offer, without over paying or falling short of the other offer. Buyers have lost properties for as little as $500 as they have come in too low, even though they could have gone higher.
A Real Estate Auction removes the guessing game and creates a fair and transparent transaction for all parties. The winning buyer only pays one bid higher than then second bidder. No over paying or losing due to a misplayed game.
Why Buy at Auction?
You are in control:
Purchase the property at a fair market price, never paying more than one bid higher than someone else.
You know the Seller is fully committed and motivated to sell.
Its Quick and Efficient:
Auctions eliminate long negotiation periods. Purchasing and closing dates are pre-determined.
Buyers know they are competing fairly and on the same terms as all other buyers.
You receive comprehensive information on the property.
No Running Around:
In Multi-property auctions the buyers see many offerings in the same place at the same time.
It’s a Good Deal:
Purchase the property at fair market price, never paying more than one bid higher. Smart investments are made by purchasing through the auction method.
Prior to Auction
Do your Homework
Information on all our auctions is available online or through our office. Make sure you read the auction terms & conditions, which can vary from auction to auction.
Know what type of Auction it is!
Auction with reserve
Subject to seller confirmation: Properties that are offered with a reserve are subject to seller acceptance within the time period stated on the listing. The winning bid must remain irrevocable by the High Bidder during this period. The suggested opening bid in the marketing materials is simply where the bidding will start: in no way does it obligate the vendor as to the amount that he will accept or reject. The Vendor reserves the right to accept the final high bid at the time of the auction.
Auction without a reserve: Absolute means the property will be sold to the highest bidder. There are no minimums or reserves in an ‘Absolute’ auction; the vendor may not bid on the property. Some auctions will have certain parcels to be sold absolute while others are offered with a reserve. Please check with the auction team for the details of each auction.
Absolute auction with a minimum bid
Allows the best of both above. The seller sets a stated minimum opening bid. The seller may not withdraw the property once the opening minimum bid has been reached but can do so before the auctioneer receives such a bid.
Sealed Tender Bid
In this type of auctions all bidders simultaneously submit sealed bids in an envelope which are then opened at the same time. No bidder knows the bid of another participant and thus they cannot adjust their bids accordingly. It eliminates the open competitive bidding. The highest bidder pays the price they submit.
The Seller has the right to establish a reserve price and is under no obligation to accept any of the bids.
Request a Bidders Package:
This package includes all pertinent information on the property:
- Property Feature Sheet
- Certificate of Location
- Declaration of Immovable by the Seller
- Independent and Certified Building Inspection Report
- Municipal and School Taxes, Expenses
- Leases (if applicable)
Inspect the property
Open houses will be scheduled for you to view the property. A recent Building Inspection Report is in the Bidders Package that will be transferred to the winning bidder, however if you chose to have further inspections you need to complete the inspection prior to auction.
Register Your Interest
Please let us know that you are interested in the property and give us your contact details so we may share any new information with you prior to auction.
Prepare Your Finances
Most of our Sellers request a letter of Capacity of Financing from a reputable financial institution, for Buyers to register. You will also be asked for a refundable registration fee (deposit) by means of cheque, the amount will be stated of the feature sheet of the property.
Auctions are held either on site or at a local hotel ballroom.
To gain access to the auction you must have registered and obtained a bidders card. This means filling out a bidders registration form, providing 2 pieces of identification and giving the required deposit cheque. You will at this point receive your Bidder’s Card, keep this safe at all times – your bid is a legal, verbally binding contract.
If you are working with a real estate broker, he/she may accompany you to the auction however he/she must fill out a standard client registration form prior to auction. See Information Package of subject auction.
If you cannot attend the auction, you may have a proxy bidder in your place as long as the proxy has the required Power of Attorney Documents and meet all other registration requirements. Pre-Auction Announcements The Auctioneer will announce any amendments to the terms and conditions of the sale and explain the auction procedure. If you have any questions, please address them to the Bid Assistance.
Bidding is easy – just raise your hand! Make sure the auctioneer acknowledges your bid and call out if necessary. When you are unwilling to go any higher in price, just shake your head to let the auctioneer and the Bid Assistant know that you stop bidding.
Once the property has been declared sold to you, there will be a Buyer’s Premium (plus GST/PST) added to the hammer price to create the final sale price. Remember when you are bidding that the Buyer’s Premium will be on top of your bid.
If you are the highest bidder you will be requested to sign a standard Promise to Purchase form with the owner, which will be irrevocable for a pre-determined time. The Promise to Purchase will then be sent to your Notary for the preparation of the Deed of Sale and the registration of the sale. If you have never attended an auction, you are missing out! Auctions are exciting and most importantly, auctions are fun! Auctions exhilarate and captivate everyone, from the opening call of “Would you bid?” to the sound of the gavel slamming down and the ringing of “Sold!”.
Selling at auction
Why do “priceless” works of art more often than not sell by way of auction? The answer is because the competitive bidding of an auction determines the market value and establishes the highest price the consumer is willing to pay. No more, No less.
The same applies to real estate.
Hot Properties that sell in a short period of time or receive multiple offers in traditional real estate sales, should be auctioned. Auction marketing gives enough time for the public to be aware of the sale, show their interest and create an open competitive bidding forum to acquire the highest possible price.
Unique Properties that can be a tougher sale in traditional real estate, due to a smaller number of buyers looking for this type of property, also benefit from an auction. The intense auction marketing pulls in the right buyers for the property gathering them all in one place at the same time which again creates a competitive bidding situation.
When a property remains on the market for an extended period of time a couple of things happen. First, the owner’s holding costs will continue to accumulate, lowering the final profit on the asset. Second, statistics show that the longer a property sits on the market the lower the final sale price will be. The common question agents hear is “what is wrong with the property, why hasn’t it sold?”
Auctions accelerated sales marketing, is truly the best approach to creating a fair, competitive sale while ensuring that the property is in the spotlight in order to bring together the highest number of buyers at the same time.
- Buyers are pre-qualified, focused and serious.
- Non-contingent offers on the property.
- Shorter listing time means less holding costs.
- Forces market to react due to a pre-determined sale date which creates a sense of urgency and requires a decision.
- Targeted marketing and advertising program magnifies property benefits and maximizes the return.
- Advertising spotlights the property and the absence of a fixed price point stimulates all available buyers
- to consider the property.
- All prospective buyers are brought together at one time and place, to compete for the property.
- Through competitive bidding, the seller receives the highest offer available in the market.
- The seller, controls terms of the transaction.
- Auction “freezes the market”, all potential buyers – who are actively looking to purchase will be visiting the property and will be participating in the auction.
- the property will be sold in a short period of time for it’s true market value.
Types of Auctions
Reserve Auction – Subject to Seller’s confirmation
An auction in which the seller reserves the right to accept or decline any and all bids, and even to withdraw the property at any time prior to the completion of the auction event. This provides the Seller with total control over the sale, but may not be attractive to prospective buyers since they cannot determine if the Seller is serious about selling the property.
The absolute auction is when the property is offered at auction without any reserve. Here the property is sold to the highest bidder regardless of price. This form of auction is very exciting for bidders and causes the best reaction in the market place since it creates the highest amount of interest in the property. Absolute Auctions can bring higher prices than the property may have been sold for utilizing the traditional method of marketing.
Absolute Auction with Minimum Bid
Can allow the best of both the above. In this situation the Seller sets a stated minimum bid, which is low enough to attract interest, but sets a floor on which to establish competitive bidding. The advantage of this method lies in the seller’s ability to set an opening bid to protect his interests while letting the buyers know he is committed to selling the property.
Sealed Tender Bid
In this type of auction all bidders simultaneously submit sealed bids in an envelope which are then opened in the same time. No bidder knows the bid of another participant and thus they can not adjust their bids accordingly. It eliminates the open competitive bidding. The highest bidder pays the price they submit. The Seller has the right to establish a reserve price and is under no obligation to accept any of the bids.
Best Market for an Auction
- In good times or bad times auctions will deliver a firm and time-defined sale of the property by competitive bidding regardless of market condition.
- Seller’s market – is one in which there is a high demand and low inventory; auctions can bring a higher return with a significant amount of competition.
- Changing market or balanced market – an auction will deliver a sale within a shorter time frame.
- Buyer’s market – too much inventory, declining buyer interest, an auction can highlight the property delivering a firm sale.
- Unique properties such as waterfront, trophy homes, multi-parcel land, vacation homes etc. – focusing market attention on these properties for a short specific period of time, builds-up the momentum and excitement for acquisition of a one of a kind property. Will attract buyers that may not have considered the property previously.
- New constructions – a new development could “kick off” a sales program with an introductory auction to highlight the development to potential buyers. As a grand finale, developers can market the final inventory as a “developer close-out” to complete the sale program.
What if the property doesn’t sell?
If, for whatever reason, we don’t reach the reserve price, the seller can decide to accept the highest bid on the day if he chooses. If the final bid is not to the satisfaction of the seller and the auction is stopped without a sale, more often than not the property sells within the next week after the auction due to the intense marketing campaign. Buyers who missed the auction or those who attend having second thoughts about the property often call the day after the sale to place an offer.