Muskoka developer Bruce Evans is calling in the auctioneer to sell off condo suites and other real estate at the waterfront complex in Gravenhurst, Ont. known as Muskoka Wharf.
More than 40 lots will go under the gavel of an auctioneer from Los Angeles-based Kennedy Wilson.
This type of live auction, which will bring bidders together in the ballroom of a downtown Toronto hotel, is a relatively rare method of selling real estate in Canada.
Bidding will take place on 40 condo-hotel units in the Residences at Muskoka Wharf. The sale will also include five condominium suites in a nearby waterfront building, and three vacant lots zoned for commercial use.
Mr. Evans, founder of Evanco Homes, led construction on the $170-million redevelopment of Gravenhurst, Ont.‘s formerly-moribund waterfront.
The developer says he is turning to live auction as a way to sell the remaining properties quickly and therefore avoid ongoing advertising and marketing expenses.
“It’s more cost-effective,” Mr. Evans said in a telephone interview. “It all happens in a short period of time and that saves on many aspects.”
He points out that such auctions are widely used as a way to sell real estate in the United States and Australia, among other countries.
The condo-hotel units are part of a 106-unit, five-storey building operated under the Residence Inn banner by Marriott. Owners can use the units for up to five weeks a year and place them in a rental pool the rest of the time.
By the time buildings were ready for occupancy two years ago, Evanco had sold about 30 to 40 per cent of the units through its sales centre in Gravenhurst.
Mr. Evans says the timing seems right to sell off the rest of the units since the hotel has been up-and-running and existing owners have been able to reap net revenue from rentals after management fees and expenses are paid.
Mr. Evans says potential buyers who have visited Muskoka Wharf in the past seemed cautious.
“A lot of people have been sitting on the fence,” says Mr. Evans. “You have to show them.”
The broader cottage market in Muskoka has slowed since sales and prices reached a peak in 2007. Properties take longer to sell and buyers want to feel they are snagging a bargain, real estate agents say.
The current economic turmoil in Europe and roiling financial markets also make buyers jittery, Mr. Evans acknowledges.
“There is no question about that,” he says of the widespread anxiety, “but at the same time there are people who have money to invest.”
Mr. Evans expects the buyers will be a mix between people shopping for a family vacation spot and others looking strictly to make an investment.
Rhett Winchell, president of Kennedy Wilson Auction Group, says real estate auctions tend to be lively affairs, with each property on the block for about two minutes before the gavel comes down.
“It’s exciting,” says Mr. Winchell. “Hopefully there’s a lot of energy in the room.”
The Dec. 4 sale will also be broadcast over the internet, with participants able to place their bids online.
Royal LePage Signature Realty of Toronto is showing units and providing information and documents to potential bidders. Broker Simon Giannini says the firm’s website has had hundreds of hits from prospective purchasers. He can’t estimate how many might participate in the auction.
“There are a lot of looky-loos, too.”
Mr. Giannini says only registered bidders can be present at the auction and all those must go through a qualification process that includes details about whether they require financing and proof of liquidity if they are paying cash.
In turn, registered bidders will receive disclosure documents which spell out how the rental pool works and other details.
“We strongly urge them to read the disclosure documents,” says Mr. Giannini, adding that bidders can also show the documents to their own lawyer.
The push to revive Gravenhurst’s waterfront as a tourist destination began in the late 1990s as a joint effort between government and private businesses. The wharf had formerly been a centre for boat builders and lumber mills before those industries fell into decline.
The refurbished waterfront includes a boardwalk, a nautical-themed village of restaurants and shops, and a museum designed to resemble a large, red wooden boathouse, circa 1915.
Now the area draws tourists to such events as a show of antique and classic boats, a dockside arts festival and a weekly farmers’ market.
Evanco marketed the condo-hotel units to people who want to spend vacation time in Muskoka but can’t afford or don’t want the maintenance and upkeep of a traditional cottage.
Mr. Evans points out that the old-fashioned steamboats the Segwun and Wenonah II depart from the wharf and golf courses are nearby.
A reserve price of $85,000 has been set for the Residence at Muskoka Wharf units, which are described as full ownership condo-hotel suites. The owners possess whole title and are able to sell at any time. In some fractional ownership or timeshare arrangements, multiple parties own one suite.
Units have studio, one-bedroom and two-bedroom layouts. Most have private balconies and gas fireplaces.
The units previously had asking prices of up to $375,000 each.
Mr. Giannini says owners will have the option of using their units for 35 days each year in any season. That way owners can go for a long weekend or take a few days during the week.
The hotel operator maintains the furniture and decor.
Owners can also exchange time in Muskoka for a vacation elsewhere through Interval International.
When owners are not there, they must place their units in the rental pool.
The five conventional condo suites are in a six-storey building called the Greavette after one of Gravenhurst’s storied wooden motor boat builders. Those units have had asking prices of up to $650,000 in the past. The reserve bid on those units will be $155,000.
Their owners can use them year-round.
The three commercial lots at Muskoka Wharf have had previous asking prices ranged up to $507,900. The reserve on Dec. 4th will be $120,000.
Mr. Evans, who has been building in Muskoka for 50 years, has built houses, roads, bridges and golf courses including Angus Glen. He built and operated the Grandview Resort near Huntsville, Ont.
Kennedy Wilson will also hold an information session, which includes a live practice auction for registered bidders, this Sunday.
Those who want to see the units before registering can make the trip to Gravenhurst for a tour, says Mr. Giannini.