The face of the real estate market place in Calgary is once again changing. Just when it seems there couldn’t be any more real estate rules to be broken, a new twist has been thrown into the mix. Auctioned real estate has come to Calgary!
You may have read that a home in NE Calgary sold recently through an auctioning process. In other parts of the world auctioned real estate is common due to the lack of a successful MLS system. In the past auctioning real estate in Alberta has been mostly limited to estate sales. An auctioning mentality is not new to Calgarians.
Many resale properties marketed through the MLS system are currently being sold under a multiple offer situation, where all the buyers know that all competing offers will be presented to the seller at the same time. This heightens the excitement around the offer process and buyers get caught up in the energy of the unknown. What will it take in terms of price to “win” this property? In order for their “bid” to win out, buyers need to know the maximum they will pay for a property to win out in the bidding process. This process is very similar to that experienced at an auction.
As the supply of resale residential property in Calgary continues to remain low, buyers will continue to compete for new inventory. So the benefits to the seller in the auctioning format may initially appear obvious: they are guaranteed the best price for their property.
Is this really the case? The seller is vulnerable by only exposing their property to a fewer number of prospective buyers than if the property was marketed on the proven MLS system. Especially today Calgary is experiencing a real estate frenzy where by there are 1,000’s of prospective buyers working diligently with real estate professionals through the highly acclaimed MLS system. By not taking advantage of the proven MLS system using an experienced and reputable real estate professional the selling price may in actual fact be limited.
What is outrageous is the seller without realizing it may be leaving money on the table! Another drawback for the seller is the lack of information regarding the perspective buyer who places the highest bid. Using an auctioning process anyone can bid on the property. For Sale By Owner in this situation does not have the backup of a real estate professional representing the buyer to make sure that the deal closes without incident.. A buyer working with a Realtor is more likely to have been guided through the qualifying and pre-approval process for purchasing a property, thereby minimizing the possibility of a sale collapsing through due to the buyer not qualifying for a mortgage.
It appears Calgary will be seeing more auctioning of real estate before long. People love to try new things! But keep in mind, a new format doesn’t automatically mean more money for your property. Auctioning your valuable property may in fact mean less!