How to purchase a property via an online auction

The real estate world has moved completely online, in-line with fresh industry regulations due to the COVID-19 climate in which we currently find ourselves in. In Vancouver, this means some real estate transactions cannot take place in person, so Harcourts offices have moved partly to a digital experience: viewing properties, signing leases, signing contracts and selling and buying through property.

Online auctions or “virtual auctions” have quickly become a recognizable way to buy and sell a property. Popular with buyers who have targeted properties based on lifestyle rather than suburb, we have witnessed an increased in the number of properties going to virtual auction. While it doesn’t really change the way real estate is advertised, eg: via a range of online platforms, it has changed the way we purchase it.

With auctions now being held via video link, it’s easy to get confused as to how the whole thing works, after all, you can’t be there to put your hand up at a certain price or gauge if your competing bidders are going to knock you out with their next offer.

Auction can work on virtually any property. In fact, Harcourts Auctions has seen a 62% rate of expired traditional listings converted to auction, while 38% of the listings are new to market. An auction listing allows the seller to achieve the best possible price for their property, based on market value. There is no list price, rather a bidding to start from number; sellers also have a non-disclosed reserve price. Potential buyers can focus on what the property itself has to offer. With the reserve price, the seller may accept any offer prior to auction day. If bidding doesn’t reach this minimum price, there is no obligation to sell.

From a buyer’s perspective, a bidder can determine the purchase price representing true market value through competitive bidding. A buyer can tailor their bid according to what others are bidding.

In addition to achieving a high value for the home, the auction sale is a clean, simple, non-contingent contract. All reports and disclosures - traditionally completed by the buyer in escrow - have been completed in advance by the seller. All property information is provided up front in a transparent manner - no surprises! Homes listed via the auction method have an average days-on-market of 28 days. Over 57% of the properties sold via auction are sold prior to the scheduled auction date. However, if the auction doesn’t result in a sale on or before auction day, the process hasn’t failed. The seller knows exactly how much buyers are willing to pay and the property’s reputation remains intact as the list price has not yet been advertised. When taking a property to auction, the seller is putting a date on the sale of the property, therefore, buyers can have complete confidence knowing the seller is committed.

Overall, Harcourts auction listings receive at least 50% more inquiry than a traditional listing, with every property receiving at least one offer before auction day.

To learn more about upcoming real estate auctions visit click here.