From the blog...

AUCTION PLATFORM MISGUIDED IN APPROACH

Firstly, I am someone who is totally behind choices for consumers. I just want the public to understand some of the choices they have. We are hearing lots of ads on the radio about the company Unreserved. They want to disrupt the real estate industry. They have been in our market center for a little over a year.

This is the slogan from a recent ad from the company Unreserved  “Here to empower buyers”

It is a good slogan but what about sellers? Unreserved clients are in fact the sellers of the transactions, not the buyers. How are they empowering their seller clients who are paying them by making the process less expensive for the empowered buyer? The transparent auction is much more advantageous for buyers. So much so that the government wants to ban blind bidding because they fear prices are getting too high as a result. They want to empower buyers by getting sellers less money? When you are selling your largest financial asset and have a lot of money at stake would you want to sell using a platform that is designed for buyers? Essentially to make sure buyers don’t overpay. I know I would not.

Don’t get me wrong. If I am a buyer I would much rather be in an auction and see the prices as they go. It is a more transparent process, no question. However, if I am a seller I am trying to maximize through the current blind bidding process. It is the best way to sell a house in a sellers market like the one we are currently experiencing. I am still having trouble seeing the value proposition this company is offering sellers. Just my opinion. I was just looking through one of their listings and they had a picture of the house with massive snowbanks in front of it. It is MAY! They are a very well-funded company so they are in no rush to be profitable but it will be interesting to see if they are able to take the market share they need to survive.

If I was a consumer looking to save money I would use a limited-service brokerage. At least it is regulated in the business. Auction companies are not.

Here are a few other things to consider with this process:

• If an auction goes badly, consumers have no one to complain to. There is no independent body to complain to and no penalties in the event a consumer feels they were treated unethically by an auction company. In my industry, we have a strict code of ethics with massive fines if they are not followed.

• There is also really no deal until an agreement is formalized after the auction. Not like a traditional bidding process with Realtors® where agreements are signed and submitted to the seller for them to select the best option. So when they sign it is a legal document.

• Owners of real estate auction companies are not vetted for past criminal or fraudulent activity, which matters if they are helping to manage someone’s life savings. In fact, this particular owner has had a conviction for fraud in past business dealings. As I mentioned choice is good. However, they should be playing by the same rules with the protection of the consumer at the forefront of the transaction.