Purpose: To explain when and how a trade in real estate is done through an auction and a real estate brokerage with an auctioneer.
This bulletin applies to real estate brokerages, brokers, associate brokers, associates, and auctioneers.
A client must use a real estate brokerage to auction real estate unless the auctioneer holds a real estate broker’s licence from the Real Estate Council of Alberta (RECA). The real estate brokerage may pay the auctioneer a flat fee or an agreed percentage of the sale price.
The real estate brokerage must:
- ensure the property sale complies with the Real Estate Act
- enter into a seller representation agreement with the seller that includes the terms and conditions of the auction
- enter into an agreement with the auctioneer, including:
- role and services of the auctioneer
- responsibilities of each party
- fees paid to auctioneer
- ensure the brokerage name is included in all advertisements of the auction
- obtain, review and provide property information to interested bidders
- treat the successful bidder as a customer
- make all appropriate disclosures and ask for acknowledgment of the disclosures
- assist the successful bidder with preparation of a purchase contract and payment of a deposit
Brokerage and auctioneer working together
Typically, a real estate brokerage and an auctioneer work together to hold an auction in the manner outlined below:
- an information package is prepared on the property for prospective bidders
- bidders may have to pay a nominal fee to get this package
- before the bidding starts, the bidder is responsible to confirm permitted uses, taxes, levies, restrictions, costs or requirements by any level of municipal, provincial or federal government or any other information relevant to the buyer
- bidders need cash or pre-approved financing before the auction date
- bidders have access to see the property before the auction
- the auctioneer conducts the auction
- at the end of the auction, the successful bidder goes to the real estate professional to complete the purchase contract
- the property is sold “as is”.