A teardown house on a large lot just south of Deer Lake Park in Burnaby, listed at $1.7 million, failed to sell in an open public auction held today, June 29, after no bidders showed up to the auction.
The event by Able Auctions attracted a lot of media interest, with major local TV and radio outlets covering the story extensively following a media preview tour Monday June 27.
Listing agent Greg Klemke, a REALTOR® with MacDonald Realty Westmar, told REW.ca in an interview immediately after the failed auction Wednesday that no live bidders had turned up, even though several media outlets had set up cameras and microphones for the highly anticipated event.
He said that there had been some bidders who registered online, and the highest online bid was $1.5 million, which “didn’t even come close” to the undisclosed auction reserve price. Klemke added that the reserve price was in itself considerably below his expectation of the market value of such a property.
The property’s value is entirely in its land, with the “unlivable” house described as having “little or no value,” according to the auction website.
However, the highly buildable, 50-by-149-foot, R5-zoned corner lot is located in the desirable neighbourhood of Upper Deer Lake, near schools, transit and shopping.
Klemke said he thought the reason for the failure of the auction was that Able Auctions did “too good a job” at promoting the auction.
“It was a media circus,” Klemke told REW.ca. “I have a feeling people may have showed up and been intimidated by the circus-like atmosphere, got back in their cars and left... It could have been partly fear. We were dealing with builders, as this is a lot-valued property, and perhaps they wanted to stay anonymous, maybe they don’t want people to know how much they paid for a property.”
When asked what is next for the listing, Klemke said that it is available for sale on the MLS® and that he and his vendors will start entertaining traditional offers. But when asked if the offers would be via closed-envelope bids as is the norm, he replied, “I don’t know what we’ll do. We weren’t geared up for this.”
The vendors had decided to sell by auction in an effort to capitalize on Metro Vancouver's red-hot housing market, the auctioneers told media ahead of the event. The owners had agreed to pay a fixed commission, rather than a percentage of the sale price, which would have been significantly lower than the usual agent commission on a property of this value.
The sale was organized by Able Auctions in response to the sentiment that home buyers are tired of closed-envelope offers and bidding wars for properties, which have become Metro Vancouver’s norm.
Able Auctions has previously focused on auctioning office furniture, flooring, hot tubs, tools, used vehicles, municipal surplus and business closures. But the company said ahead of the auction that it sees real estate as a growth area for its business and that BC could follow other countries across the globe in holding home auctions as a common practice.
“An auction is fast, simple and clean, providing the transparency that buyers have been wanting,” Jeremy Dodd, president of Able Auctions, said ahead of the event. “We feel this will be a growth area for us in the year ahead. [Property] auctions are common in other countries and their time has come here at last. In the past few days we’ve been approached from home owners in other communities, about selling their homes by auction as well.”
Dodd was not available for comment immediately following the failed auction, but according to Klemke he told media at the event that he was going for “a hamburger and a couple of beers.”
“[Jeremy] is extremely disappointed,” added Klemke. “We didn’t expect this to happen… I don’t understand. The media and the public were so mad at the system for its lack of transparency, we thought that’s what they wanted.
"In an auction, buyers don’t have to pay more than a hair above the highest bidder… No more Hail Mary bids. But it’s better for the seller too. If there’s only a slight difference in the top bids, it can create a better offer.
“It’s sad – I really mean it. I’ll make more money now that [the property is] being sold the traditional way, but I’d have much rather taken less money and seen this process succeed.”
Able Auctions’ deal with the vendors meant that the vendors did not have to pay Able any costs if the sale did not go through. Able Auctions has spent at least $15,000 of marketing and legal expenses, said Klemke, which they cannot recover.
Klemke said that Able Auctions had other potential auction vendors waiting to see the outcome, who are now likely not to use that process.
“We’ll have to have a post-mortem and discuss what to do going forward,” he said.
The failed auction follows the collapse of an auction of a mansion in Victoria one week previously, at which only one bidder showed up. However, that bidder is expected to have made a private offer since the failed auction.
