Real property sells at auction quicker and more efficiently than more traditional methods in any market (more supply than demand, or more demand than supply.)
However, with the recent glut of property (lots of supply), many sellers are looking for alternatives to customary real estate marketing.
This recent trend has many companies looking to capitalize on ways to help sellers with their auction needs. Seeing that real estate brokers (and salespersons) have “control” of a good share of the market, some companies are directing their efforts to these entities to help them help their clients sell property at auction.
The online real property auction model is largely unregulated; meaning, basically anyone can do it. While all states license real estate practice, no state currently regulates the sale of real property via the Internet (online.)
Which brings us to a video and website I looked at today, where a company which provides real estate brokers (and salespersons) with a way to auction real estate online without the use of an auctioneer, stated essentially that:
- Online real estate auctions produce true market value; something traditional auctioneers can’t do.
- Traditional auctioneers who sell real estate at auction only attract bottom-feeders.
- Having local real estate brokers involved is the key to maximizing value.
I find this viewpoint questionable, at best.
- First, in many states, both a real estate license (broker or salesperson) and an auctioneer’s license is required to sell real property at auction. In those states, the broker (or salesperson) is the traditional auctioneer …
- Second, even in states where auctioneers can (and do) sell real property at auction without any real estate license, most of them are highly skilled in attracting qualified buyers to those auctions.
- Third, this company suggests that bidders will bid online in attempt to purchase a home or other real estate interest and refuse — or be otherwise uninterested — in bidding at a live auction. In other words, it’s key to prohibit live bidding to maximize value?
- Lastly, in many markets, the traditional broker/salesperson is the one who has not been able to sell much of this excess inventory. Why would they suddenly be the correct entity to find all the “right” prospective buyers versus hiring an auctioneer?
There are no facts to support the notion that traditional auctioneers only attract bottom-feeders, and do not realize true market value for their clients — in selling personal or real property at auction.
Finally, this company says in essence:
- An auction creates a deadline. In a bad market, auctions encourage buyers to act — to make a decision — as they realize they have a limited time frame to get the property they want at the best possible price. Bidders appreciate the transparency of the online bidding process.
While I would concur that an auction encourages buyers to act, I would question that the online bidding process has any more “transparency” than the live auction process. In fact, there are ways in which the online auction process is less transparent …
There is nothing wrong with augmenting a live auction with online bidding. However, there is no proof that prohibiting those bidders from bidding live, and requiring all bids be submitted online for a real property auction produces a better result.
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. His Facebook page is: www.facebook.com/mbauctioneer. He is adjunct faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.