Going Going Gone
There are many ways in which real estate can be bought, sold or leased. By far the most popular today is using the assistance of a professional Realtor to place the property on the Multiple Listing Service. Real estate brokerages created this system in order to share information about properties their clients have for sale plus it encourages agents from other firms to bring forward their buyers. In our country, members of the Canadian Real Estate Association even share the cost of maintaining a national website called www.realtor.ca (formerly known as mls.ca) and make it available to the public at no charge.
Sellers like the MLS program because it is almost universally performance based - no sale, no fee. Buyers enjoy having the support of an experienced advisor and as an added bonus in most transactions, don't even have to pay him or her, as the listing and selling Realtors share the commission offered by the seller for the transaction.
In a hot housing market, some sellers feel they can save money marketing their home privately or by enrolling in direct marketing programs that supply them signage, basic advertising, and a web site entry all for a flat fee that is payable even if the property doesn't sell. However, this approach becomes increasingly difficult when the economy slows down and buyers don't feel the same urgency to commit.
Another option that is becoming increasingly popular is the live auction. This summer our group collaborated with Cal Donald Auctions in presenting 3 lots and a house for sale in Maidstone. From our perspective, the results were quite encouraging. Not only did the property trade for fair market value, we observed active bidding from a half dozen qualified prospective buyers that hadn't previously indicated their interest; in fact, only one had actually attended the previous week's open house.
The last few years it has become common for land to be included in farm dispersal auctions. Sellers have the choice of accepting the highest bid or not; this is referred to as a "soft" reserve. It places the selling family under intense public scrutiny at the auction and sometimes if both buyers and sellers know each other, there may be increased tension. Some auctioneer firms advertise property as selling unreserved, but often as not, they have guaranteed the seller that a certain floor price will be achieved or they will buy it themselves.
In order to avoid the spotlight that comes with live auction or in an effort to ensure every prospective buyer has an equal opportunity, estate executors may turn to a lawyer or Realtor to manage a tender process. The benefits of this approach include time for the buyer to inspect the property and arrange financing. The downside is that there is no opportunity for buyers to compete openly, it may reduce the flexibility for the seller and buyer to negotiate terms other than price, and buyers usually don't have a professional representing their interests.
Modern technology now provides new opportunities for trading real estate. No longer are buyers and sellers located just only within the region; we are truly working within a global market. Next week, I will discuss one such concept that is gaining strength in Australia and the United States and will be soon be available in Canada. In any case, however a trade occurs, it all comes down to willing buyer / willing seller agreeing on value and a date of completion.
Vern McClelland is associate broker with RE/MAX of Lloydminster. For more helpful tips on buying and selling real estate, visit www.mcclelland.ca
Comments(1)