If the amount of comments on Wednesday’s blog post is any indication, it seems that people are willing to argue on both sides of this debate.

Should a seller be able to list his or her property for one dollar?  If so, what is the protocol?

I’ll explain both the pros and cons of the idea, but I can tell you that the only way I can see this $1.00 method working is by holding a professional auction…

Let me briefly recap Wednesday’s post…

A condo-owner in Liberty Village called me in to pitch my services as she prepares to sell her townhouse, and after pouring over copious amounts of real estate related data, she concluded that we should list her condo at one dollar.

Despite my reflex-action-like laughter, she revealed that she was indeed serious.

She figured that the under-pricing in the Toronto real estate market was so rampant and transparent that she may as well just price her townhouse at $1.00 and cut out the BS!

I was so shocked at the idea that I really didn’t know what to say, but during the course of the next half hour, she and I hashed out the pros and cons.

Here is how I break things down:

PROS

More Potential Buyers

The lower a property is priced, the more buyers that will be interested.  That’s why you price your $550,000 house at $499,000 – to attract those people looking in the mid-$400’s who will submit a pointless offer and help the eventual buyer move from $550,000 to $560,000, or more!

Pricing a property at $1.00 will undoubtedly bring the deal-seekers out of the woodworks.  Won’t it?

Publicity

Not only will every single Realtor in the city be made aware of this unique listing, but I’m sure there would be some media as well.  Would CTV run a story?  Would we read about this in the Globe & Mail or Metro?  If you’ve ever read Purple Cow by Seth Godin, you know that the way to success is by being remarkable and unique.  Maybe this is the ticket?

No Indication of Value

By not giving buyers a starting point for the “bidding,” not even $350,000, it could be argued that the mass confusion that will undoubtedly ensue will result in at least one buyer to overpay.  Most buyers have access to the same sales data via their Realtors, but surely one buyer will emerge from the pack.

CONS

Fewer Serious Buyers

Yes, I know that the first point in my “pros” section was about more potential buyers, but an argument could be made to the contrary.

There are a host of buyers out there that will say, “There’s no way in hell I’m gonna get involved with that!”  And should we blame them?  Who wants to get involved with this circus?

An argument could be made that any seller who is nuts enough to list his or her condo at one dollar might also be unstable enough to abruptly take it off the market, ask for more than it’s worth, terminate the listing and re-list, or a host of other issues.

Automated Searches

How many buyers are on automated searches?

Think of a buyer who is looking for a townhouse between $350,000 – $450,000.  He’ll never find this listing because it’s priced at $1.00!  Not only will he miss it via the MLS automated search, but he’ll also miss it if he searches www.realtor.ca.  Not to mention – it could get past his Realtor’s eyes as well.

My Reputation

Here is where we get really, really personal, but I can say that I have no interest in being the ground-breaking agent who brings out a listing at $1.00.

I definitely have been known to think outside the box; hence the creation of this real estate blog in early 2007 before any Realtor had a clue what a blog is.  And I’ve been known to walk a fine line, trend into the grey areas, and ruffle a few feathers – all in the name of the greater good for my clients and for our real estate industry.

But do I want to be “that guy?”

No, I don’t.

Every Realtor in the city will view this new listing on a Tuesday morning and say, “What the hell is this?  Is this an error?  Is this condo listed for a dollar?”  Then they’ll scroll down to the bottom of the page and see “BOSLEY REAL ESTATE, David Fleming, Salesperson.”  The agents that know me will wonder what the hell I’m doing, and the agents that don’t know me will think I’m a lunatic.

I’m not aiming to just maintain the status quo in this business.  I’m always looking for better ways to serve my clients and to improve my business.  As for the industry, I sit on the Condo Task Force at the Toronto Real Estate Board as we brainstorm new ways to improve MLS for agents and the general public, and I am an active proponent of change.

But if we’re going to list properties at $1.00, we need a system that can handle it.

THE ANSWER?

Real Estate Auctions

As was commented by McBloggert the other day, “….the system that Realtors work in isn’t property equipped to efficiently and effectively deal with a situation such as this.”

I agree.

If there was a process whereby sellers could auction off their properties, there would be no harm in listing a property for one dollar!

Start the bidding at one dollar, and let the highest bidder take home the prize.

Of course, there are issues with this idea as well.

First, you’d have to bring all the buyers into the same place at the same time.  How would you get the entire city into an auction hall?  How could you combine the massive exposure that MLS brings with an auctioneer and a gavel?

Second, who is going to facilitate the auction?  Are we still talking about Realtors here, or are we talking Christie’s or Sotheby’s?

Perhaps we’re thinking old-fashioned here, and maybe we should just assume that this “idea” of a real estate auction will take place online.

Is there any way for C.R.E.A. or T.R.E.B. to create an auction platform?

Just as agents advertise “Offers kindly reviewed on Thursday, May 13th @ 7PM, please register by 5PM,” maybe in the future we could advertise “Auction begins at 7:20PM sharp, please register for your unique auction-ID and sign-in by 7:00PM.”

Maybe there is a way to auction real estate with a more transparent bidding process than what we already have.

Of course, this isn’t for me to decide.

I’m one Realtor out of 30,000 in Toronto, and while I’d love to see an auction platform in the future, I don’t think we’ll ever see one.

Hmmm….I wonder if there is a successful and industrious entrepreneur out there who could see “opportunity” and turn it into GOLD…