As the real estate market continues to rebound, the dynamics of the auction process are changing. One key difference is a shift away from a heavy emphasis on bank-owned, foreclosed and distressed assets to include more traditional, high-quality properties. According to Auctions by ATG, this shift will continue through 2015, as the pool of buyers and sellers expands their sights and sellers look to leverage the traditional advantages and benefits of marketing at auction.
“The market over the last few years essentially served to typecast real estate auctions as being primarily for distressed assets; properties that banks and troubled owners needed to unload quickly and with a high degree of certainty,” said Mary Fran Gill, Operations Manager, Auctions by ATG. “That is all changing now as buyers and sellers realize the benefits of auctions—a shorter but intense marketing period and a date certain sale.”
While foreclosures and bank-owned properties will continue to be an integral part of the auction process, more and more auctions will include properties with greater stability, and properties that would be considered luxury or prime real estate, Gill said.
Gill noted that one of the greatest misperceptions in the market is that if a property is up for auction, there must be something wrong with it. “The auction process is a great way to ‘let the market speak,'”s he said. “Buyers want to buy at the greatest discount possible while sellers obviously are motivated to sell for the highest price. When marketed for auction, the market speaks to a property’s value, and it does so quickly.”
The market also should see more properties moving through the auction route than in the past, due to the efficiency of the process and investors’ increasing comfort level with using auctions.
Among the other notable observations Auctions by ATG expects to see in 2015 are:
• Buyer pool expanded, auction firms shrinking—The pool of buyers buying at auction is expanding, as more private investors and individuals become comfortable with the online auction process. Potential investors who would have been intimidated by an in-person auction, are gravitating toward online auctions and the privacy they provide.
“In a twist of irony, however, we likely will see a reduction or consolidation in the number of firms devoted exclusively to auctions,” Gill said. “We saw a tremendous influx of more opportunistic auction firms several years ago as the potential pool of properties to sell at auction had increased due to economic conditions.”
• Technology has been a game changer for the auction industry and will continue to drive the auction process into 2015 and beyond. “Auction participants—buyers and sellers—are drawn by the efficiency and speed of on-line bidding and the ability to buy and sell real estate from the comfort of their offices or homes,” Gill said.
• Early bidding wins—Many properties sell via pre-auction bidding through email. Savvy investors are getting in early and bidding ahead of the auction time to secure the properties they want.
• Buyers and Sellers are expand their reach geographically—with the ease of online research and bidding, more buyers are looking at properties in other states or even countries. The Internet creates a wider territory for both buyers and sellers.
