As the real estate landscape evolves, more and more home buyers and sellers are using auctions as an alternative to traditional home buying.
Real estate auctions continue to be one of the fastest growing sectors of the auction market. According to the National Auctioneers Association, residential auctions generated $17 billion last year alone.
For sellers, auctions can translate into immediate cash and no long-term carrying costs. Buyers can save time and money. A listing can typically sell within 9-12 minutes.
Locally, it seems that while there are auction companies out there, the trend seems to be on the downward slope. Costs involved with auctions, unlike a listing, revolve around advertising. The seller in addition to listing the property for a traditional commission must also pay upfront advertising costs that the auctioneer needs to advertise the auction. These costs can run as little as $5,000 and as much as $15,000 or more. Auctioneers I have spoken to recently have told me that they would not take my money right now as in their opinion the auction market is a slippery slope at best. The last auctioneer conveyed that in his last held auction there were no buyers who showed up. That's right. After the seller spent almost $10,000 on advertising through the auctioneer's firm, the only people who showed up were other nosy neighbors and Realtors.
On a side note, one reason turnout was probably bad was because the weather did not cooperate the day of the auction. Therein is the other issue. If you as a seller spend $10,000 advertising an auction for a certain Saturday, you have that auction on that Saturday whether or not you have sun, rain, or snow. With 10 months or more of inventory in many areas including our own, in the midst of a buyers market, on a day where the weather does not cooperate you don't have many buyers interested enough to brave the elements for "one more auction" or perceived distressed sale as there are so many to pick from in this market.
I agree with your comments 100%. That's why I see a place for taking the bids online. You still need to do the open house previews and some advertising to get people in the house, but more like $500 in ads or less. Then take all the offers online over a 3-4 week period where buyers can bid from the comfort of their homes. I'm seeing the online method growing fast.
I am a specialist property/real estate auctioneer in South Africa. The problem with many sellers here is the lack of understanding of the auction process and I have to sell the concept a few times over. Another real problem I have found is that when a property/real estate has been messed-up by a greedy estate agent, with an over-priced property/real estate then to even try and auction that property/real estate afterwards, will not only attract zero buyers, but the property/real estate will have to wait for at least 12 months to stand a reasonable chance of a successful auction.