It’s the latest real estate trend and it’s catching on quickly in Alberta – selling luxury properties on the auction block.
Although selling real estate through an auction process might seem like a new idea here in North America, Murray Lange, Alberta and British Columbia business development officer for New York-based Concierge Auctions, says the practice has actually been around for a long time.
“In other parts of the world, auction is the main way that all property is bought and sold,” he said. “Here in Canada, it is definitely still in its infancy.”
But that is changing. Lange says Concierge Auctions has sold 13 properties in Canada so far, with its 14th underway. “And, we are on target to hit 20 by the end of this year.” He notes that most of those properties have been in Alberta and all of them are unique properties priced over the $2-million mark.
Engel & Volkers REALTOR® Mark Evernden first brought Concierge Auctions to Canada to sell Blue Valley Farms, an 18-hectare equestrian training compound near Spruce Meadows, in 2014. Since then, the company has auctioned several other properties in the Calgary area, including two estates in Hawk’s Landing, a 6,300-square-foot home in Stone Pine, and recently, an uber-luxurious, two-storey, six-bedroom penthouse in the prestigious Estates complex in Calgary’s Beltline community. The home features more than 550 square metres of living space, including an elegant foyer and contemporary chef’s kitchen, as well as a conservatory, solarium and home theatre.
With top-notch amenities, including a 24-hour concierge service, saltwater pool, gym, hot tub and rooftop terrace for entertaining, The Estates is coveted downtown real estate. The penthouse was listed for $2.325 million and sold without reserve bid in co-ordination with Gordon Ross of RE/MAX through the auction process on June 28th.
Certainly, this method of sale is generating interest. Sellers, buyers and agents all benefit from the ease of the transaction and the set timeline. Selling at auction identifies the value of an incomparable asset and does so in a pre-determined timeframe. Plus, buyers enjoy a streamlined, market-driven transaction with no post-auction negotiation or contingency.
“There is a lot of growth that is going to occur in this business as it becomes more and more recognized as the most efficient way to sell a property above a certain price point.” – Murray Lange, Concierge Auctions
“These are all unique properties and many of them are illiquid and the regular process is not working. The home has been listed for a period of time, it isn’t moving,” said Lange. “Really, the only tool that the agent and seller can bring to the table is price reduction.”
Lange has firsthand experience of how frustrating it can be to sell a luxury property. In 2014, he put his 6,300-square-foot estate home on the market, only to watch it linger there for close to two-and-a-half years.
“We started going through price reductions – we lowered the price three times, changed listing agents – the usual format,” he said.
It was then that he went to the listing agent, Sotheby’s, and asked if they had a solution. The concept of auction came up and Concierge Auctions was commissioned to work with the listing agent.
“I sold my home within 30 days and closed within another 30 days,” said Lange. “Within 60 days, the entire process was completed and the money was in my bank.”
Needless to say, Lange, who has 20 years of commercial real estate experience, recognized a tremendous business opportunity and joined the U.S.-based company as the Alberta and B.C. liaison.
“There is a lot of growth that is going to occur in this business as it becomes more and more recognized as the most efficient way to sell a property above a certain price point,” he said. “It is relevant in a seller’s market and it’s relevant in a buyer’s market.”
In addition, the auction process is relatively simple. It even has its own app and, for the most part, it is done remotely. Homes can be sold on reserve or unreserved bid. Interested buyers are carefully vetted. To be eligible to bid, they must put down $100,000 and show proof of funds for the remainder of the price, from bank statements to letters of financing. However, anyone can download the app and watch the action.
Founded in 2008, Concierge Auctions has closed more than $750-million worth of luxury property transactions, with most sales between US$2.5 million and US$30 million. It has sold properties in several countries including the U.S., Canada, Mexico, Fiji and the Bahamas.