The Surrey 699. No, it’s not a police satire based around the 699 Police District in Surrey. It’s the growing practice of selling homes in a blind auction environment that’s become the easy “go-to” sales tactic in BC real estate.
As little as five years ago, the environment in the Surrey real estate market was quite different. I actually remember having the preference of working with buyers more so than sellers because of the fact that even if you took a listing, there was no guarantee that the property would actually sell. You could invest a substantial amount of time and money into marketing a home, only to have it sit on the market for months and months at a time, until your client gets frustrated and decides to no longer sell. Ohhhh, what I wouldn’t give for those days to return.
There was actually a time when us as agents, would be asked to price out the value of a home and base it on specific facts about the subject property. Things such as age, square footage, land size, bedrooms, bathrooms, and more… you know, things that one would assume would make up the logic behind the price of a home. But why let logic and value get in the way of a good time?
Figuring out the fair market value of a home may be hard, but it’s even harder when you have no foundation to base your valuation on. Let’s think about this. Market value is based on comparing the sale price of similar commodities that preceded the transaction in question. But if there is so little of the product to go around that the buyer seemingly does not care what he/she will pay just to get their hands on it, the idea of placing value based on previous sales goes right out the window.
Fast forward to the reality that we currently chronical as 2017. Why bother figuring out what a house is actually worth when someone will just pay more trying to get it. Why not simply list every average, old 3 bedroom, 2 bathroom house on a 7000 +/- SF lot in Surrey at 699k and let the buying public place bids against one another to see who wants it the most. Wait… this, in theory, actually sounds like a great, open auction environment. Only one problem, it’s not open. A buyer can’t see the bids they are competing with, nor can they really be sure how many competing bids there actually are. The latter is taken at the word of the listing agent.
When you’re a buyer in a situation where multiple offers are coming in on a certain home, you basically write a number on a piece of paper, and throw it in a hat. So now, instead of agents saying “I think the house is worth 760k, let’s list it at 770k so we have some negotiating room”, the common practice is “let’s not split hairs if it’s worth $760 or $750. Let’s just list it at $699k and see who the craziest, most desperate buyer is.” What’s the worse that can happen? If they don’t get the $760 they wanted, no one has to know about it because none of the bids are known to the individual parties trying to acquire the property.
By default, it simply becomes an auction. A completely blind auction on the single most valuable investment in most people’s lives.