Canada witnessed its first major multi-vendor property auction on May 25 at the Chestnut Park Hotel in Toronto, Ontario.
The sale was organised by the Canadian counterpart of Goddard & Smith’s American joint venture, Properties at Auction, in conjunction with Toronto-based CJ Franzen.
However, despite interest prior on the 10 lots, ranging from a 2,300-sq ft shop with flat above in Toronto to a 97-unit residential townhouse complex in Sudbury, Goddard & Smith’s auctioneer, Michael Biddle, raised only about $C3m with the sale of just three lots. And all the sales are subject to the consent of the vendors.
While acknowledging the auction’s disappointing result, PA (Canada)’s vice-president, Kjeld Larsen, is optimistic about the future for this method of property disposal in the country.
“We model our auctions on those held in New York City — and we have yet to get the format right,” he says. “But we have no doubt that the property auction will become an important element of the market. A lot of people are realising that the auction is a wonderfully public price-setter.”
Nevertheless, some significant legal obstacles remain to a general acceptance of the auction method. There is doubt as to the legal force of the fall of the gavel. At present, after the gavel has fallen, a vendor must sign an acknowledgment recognising that the property has been sold.
General Canadian property-trading practice presents PA (Canada) with another obstacle. In conventional sales a would-be purchaser makes a written offer to buy, conditional on a satisfactory inspection of the property. At auction a would-be purchaser has to satisfy himself as to the property’s condition beforehand.
But Mr Larsen is hopeful that these problems can be overcome.
