When Matt Drake suggested to his wife, Wendy, that they try selling their Byron home by auction, her initial reaction was decidedly cool.
"We had to sell the home when mom moved out," he explains. "The 2,600-square-foot property was just too much for us and the dog, so we tried the market the traditional way. Over eight months later, there was very little interest.
"A friend of mine suggested we contact Michael Marienwald (president of Anchor Real Estate Investments Corp. and North American Auctioneers) about an auction. Wendy said, 'Are we freaking nuts?'"
That response didn't surprise Marienwald in the least. Most people still labour under the misapprehension that home auctions are tied to foreclosures or an estate sale after a death.
For the Drakes, that misperception vanished the moment he presented them with a detailed auction proposal and marketing plan March 23.
The document set out the purpose, outlined a direct marketing campaign and strategies, the type of auction, services offered, critical path task list, costs and even the auction date, time and site.
"We were just blown away by the plan," says Drake, a 911 dispatcher. "Wendy was now saying, 'This is great. When do we sign?'"
Within 10 days of launching the marketing program, the Drakes had a seriously interested buyer. Six hours of negotiation followed, resulting in a bid - a firm offer with no conditions with a 15-day closing, coming within $2,000 of their $359,900 asking price.
The cost to them was marginally below the estimated marketing fees of $2,411.89 for advertisements and signs. The deal was signed, sealed and delivered in advance of the planned auction date.
It marked yet another success for London-based Marienwald, a traditional realter/broker since 1989, certified real estate auctioneer since 1999 and one of only four accredited real estate auctioneers (AARE) in the country.
With his closest competitor in Kingston, Marienwald serves clients cross the province from London and Windsor to Toronto, Manitoulin Island and Haliburton Region.
"This is what I know and what I do," he says. "I don't auction jewelry or furniture, just real estate." And he's keep to explain both the benefits of auction and differences from traditional real estate selling, whether in person or on his how-to-auction-real-estate programs on Radio 980 CFPL-AM and 1290 CJBK-AM.
The real estate auction process, while still relatively new in Canada, is well-established in places such as the United Kingdom, Australia and parts of the United States.
"My process is different, because I've combined all the pluses of traditional real estate with pluses of an accelerated marketing plan, where you set the day of the sale, usually 30 to 45 days ahead," he says.
"If we get an offer before that date and the people want to accept it, I'm a broker ,so we can do it," he says. "Over the years, I would say it's 50-50 in terms of how many actually go to auction."
He says clients also like the concept of having two set days for viewing the property, rather than a process of prospective buyers visiting with their realtor at any time of the day.
Using the traditional approach, Marienwald rarely attracted more than 10 interested purchasers he says, while the auction process brought in more than 100, with some returning for a second look.
"Traditional real estate is like fishing with one line in the water, waiting for one bite," he adds, where with the auction process, "We have a net to catch all the fish and take the best one for negotiations and, ultimately, the best deal.
"At auction or before, the buyers can accept, reject or sign back offers," he adds. And the seller gets to set the reserve, or minimum price they'll accept. "If we meet the reserve, that's great.
As expected, there are those, like Bruce Sworik, president of the London St. Thomas Association of Realtors, who suggest approaching the auction route with a note of caution.
"Certainly there are benefits, like getting a price you can live with," he says.
"Not when you're buying one of the most expensive purchases in your life, having to make a decision in a matter of minutes can be costly, because you could get caught up in the moment."
Ken Sumnall, senior analyst with Canada Mortgage and Housing Corp. (CMHC), says while not that common in Canada, the auction process is a different way of attracting attention to a property.
"The person selling the home has to get the maximize price," he says. "It could be a good deal for someone, but you need a good minimum reserve bid."
Marienwald, who stresses he's not taking a swipe at realtors, says his process marries the best of both auction and traditional real-estate selling while putting power into the hands of sellers.
"Our properties are marketed in such a way that it works with the traditional practices," he contends. "We market to all realtors and we get referrals from real estate companies.
"We have created competition for property which may not have existed before. Realtors now don't have to negotiate - just show up to the auction if they want and they still get paid."
And it pays off for Marienwald, too.
What prices vary depending on the area where the auction takes place, Marienwald says his company does between 20 and 30 auctions of private and commercial properties yearly.
"So far this year, we've done about $3.6 million in terms of real estate," he says.
"We might do $5.6 million in a given year, while your average realtor in London would probably do perhaps $1.5 million to $2 million over that period."
And he says the process works for commercial properties, too.
Outlining his proposals in a clear and comprehensive fashion has won Marienwald clients like Glenn Peters, an Ingersoll businessperson who tried without success for a year and a half to sell a handful of private and commercial interests the traditional way.
"I had a plumbing-heating shop for 44 years, a couple of residential properties and another with a barn on it," he says.
"There was just no interest, so I turned to Mike in February. He's young, down-to-earth and aggressive and his package was great.
"In just 30 days, well before the auction date, we had a buyer from Kitchener. We settled at a price of $210,000," he adds.
"What can I say, other than I'm super pleased with the whole process? Just look at his track record. Only two properties haven't been sold in 10 year(s)."
Now converts to the auction process, Matt and Wendy Drake way they recommend it. "There may be some out there who aren't convinced, but not us," Matt Drake says. "When we tried the traditional way, we had six or maybe eight interested buyers, but no firm offers in eight months.
"With Mike, we had up to 50 viewers and a deal within days. How can you argue with that?"
By Geoff Dale
Special to Sun Media
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