The real estate profession (members) in the United States has a database commonly termed “the MLS.” This database contains listings (active,) withdrawn, expired, sold, temporarily off the market, etc.
Members of this association place their listings in this database so that potential buyers (their agents) can find them. Let me say that again … so they can find them.
Some auctioneers ask, “What price should I put on my auction listing in this database?” Let’s go back to our prior statement — so they can find [it] them.
Therefore, if the price on that listing isn’t in the range where people search, they won’t find it.
Ask yourself … if someone is pre-approved for $235,000 do they search for homes listed for $50,000? Do they search for homes listed for $0? How about between $210,000 and $240,000? It’s much more likely they search for a range of prices around their pre-approval amount.
Then — of course — after they find it, the buyers (agents) can see the in the remarks that the property is selling at auction: absolute, minimum bid, reserve disclosed or undisclosed, subject to seller confirmation, etc. Naturally, if they don’t find it, they won’t see this information either.
Generally speaking, buyers (agents) looking at this professional database are not looking for auctions, and rather property. The vast majority of entries in this database are not auction properties … maybe no different than any consumer?
Additionally, any listing in this database listed for any number less than market value prompts the searcher to assume something is wrong with the property. A $235,000 property listed for $50,000 suggests some issue — Mold? Fire damage? Contaminated?
Real property auctions have to have bidders — and the importance of every possible bidder is amplified as only one lot is being put up for auction. Even missing one potential bidder due to a price outside his search range can substantially injure the seller.
Lastly, I’m not convinced this professional database represents vital marketing for auctioneers generally. There are 100’s of other websites, Facebook marketing, signs, mailers, etc. which likely find enough bidders without the use of this [costly] database.
Costly you ask? Yes, in many markets it’s every bit of $1,000 a year to join the national, state, and local associations and database fees. For most real estate [property] auctioneers, the benefit doesn’t exceed the expense.
Further, these associations require classes for database use and fine and otherwise penalize members for all kinds of violations of policy. While a database (and association) must have rules, it often appears in this case more trouble than it’s worth.
Cooperation between real estate brokers began informally in the 1880’s and by the 1920’s “multiple listings” were fairly common and widespread. Yet, even with this tremendous head start with compiling real estate information, many websites and other companies have surpassed the association database in functionality and ease of use here in 2020.
Even more concerning — most of these multiple listing databases are local or regional versus a model of one single database with all real property listings nationwide. Wouldn’t that be a better model? MyStateMLS and companies like them apparently think so.
We wrote about the multiple listing service and real estate licensee associations here in 2018: https://mikebrandlyauctioneer.wordpress.com/2018/03/14/the-future-of-the-mls-for-auctions/. Alternatives to MLS and association membership have only been amplified since then. These associations seem opposed to any nationwide [efficient] model as well as lower dues.
Lastly, there is the issue of cooperation between real estate licensees (members) and the fees paid to “buyer-brokers.” Since the seller typically pays all the commissions, buyer-brokerage costs sellers additional [fixed] commission … a system some characterize as “racketeering” or a case of “price fixing.”
As of this date, there have been three (3) material lawsuits against the national association (NAR), and the United States Department of Justice is investigating the “buyer-brokerage” model. I suspect changes are coming for the multiple listing service and general cooperation in real estate sales.
Our original question was — essentially — “What to list a property for auction in a multiple listing service database?” I think in the short term, that answer is straightforward. In the coming years, however, it may not even be an option and/or it might not matter.
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.