By Myles Shane
The world’s finest art, cars and antiques are sold at auction – so, why not luxury real estate? For years research has shown that the longer luxury real estate is on the market, the less chance it has of selling.
Concierge Auctions focuses on matching one-of-a-kind properties with experienced buyers. The company has been active in 40 U.S. states and 27 countries, and says it owns 80 per cent of the luxury auction space. It creates a contingency-free sale that is usually concluded within 60 days. Concierge Auctions collaborates with agents to deliver a sale within a fixed time period by generating urgency in the marketplace. On average, a luxury property sale powered by CA produces 200 to 400 worldwide inquiries, 25 to 50 showings and three to five qualified bidders, the company says.
One of the luxury properties that the company recently attempted to auction off is River House Estate in Telkwa, B.C. The property was represented by real estate agent Faith Wilson of Faith Wilson Realty Group, but ultimately a buyer was not found.
“I came on the scene when the sellers were promoting their property themselves. We struck up a relationship and I exclusively positioned the property on my website and promoted it,” says Wilson. When the sellers ultimately decided to use Concierge Auction, they asked Wilson to formally represent them.
River House Estate is situated halfway between Prince Rupert and Prince George, 45 minutes from Smithers airport and a 1.5 hour flight from Vancouver and Victoria.
Wilson believes River House Estate didn’t sell in the traditional way using the MLS or as an exclusive because “large property estates of this nature that are a bit ‘off the grid’ generally take longer to sell. These types of properties evolve generally as a labour of love. It isn’t uncommon for properties of this nature to take a few years of showcasing before the right buyer fit comes along.”
Scott Pate, who worked for Concierge Auctions as the project sales manager of River House Estate, says, “Concierge Auctions is an alternative sales solution for sellers who want a time-certain sale. In today’s luxury real estate market, there is limited liquidity and the buyer pool is narrow. Properties in this category can be difficult to value and sell. Price has little bearing on demand and multiple buyers don’t often arrive at once. Price reductions are proven to undermine the value of a property and frequently cause buyers to sit back and wait.”
This was the first time Wilson worked with an auction house.
“It has been interesting learning about how an estate auction works. Concierge Auctions is not a real estate agency, therefore, they need to have a firm to act in that capacity. My role is to represent my clients, in this case the owners of River House Estate. My firm’s role is to act in the capacity of an agency to handle the sale of the property.”
The property was previously offered for $10 million and the auction had a reserve of $3.5 million, which means the property had to sell at or above $3.5 million at auction.
“Although we had a lot of interest, we ultimately didn’t receive a bid that fit the criteria,” says Wilson. “These off-the-grid lifestyle properties require a perfect match, and generally can take a few years to sell. We just didn’t find the right fit at this time.”
However, the experience “accomplished a secondary goal of further increasing the reach” of marketing for the property, she says.
Pate says he is confident that in the future auctions will become more pervasive in Canada. “We’ve sold over 20 properties in Canada since we first started operating in the country in 2013, including 26 Park Lane Circle, (in Toronto), which was listed for $21.8 million and sold in four weeks,” he says.
But Wilson says, “Most agents don’t know about auction houses for real estate and don’t understand the process. I don’t believe it is a trend, again, because it is not widely understood as to how an auction works, what the success ratio is and what the associated costs are to having an auction house involved.”
In the case of River House Estate, Concierge Auctions was charging a buyer’s premium of 12 per cent of the purchase price or a minimum of $175,000. It offered a co-broke of 2.5 per cent.
River House Estate sits on 384 acres in the harsh terrain of Northern British Columbia, near the Bulkley River. The main house highlights 10,000 square feet of living space with four bedrooms, five full and two half bathrooms and an attached studio, multiple river rock fireplaces, a wood-fired pizza/bread oven, artisan stained glass, skylights, a 360-observation turret with spiral staircase entry and an aquarium-view window to an outside water feature. The property also has three guest cabins as well as access to an abundance of wildlife, 15 miles of trails, a 3,200-square-foot garden, a gazebo and a waterfall.