Real estate auctions in Florida are quickly growing in popularity among Realtors, sellers and buyers. The following industry news excerpts and web links are provided to give you a broader understanding of the auction process from a variety of perspectives.

In a couple of these articles, you will notice that there are references to auctions working better for sellers and better than traditional listings, which were not bringing buyers. It is not our intention here to be critical in any way of the traditional method of selling by way of listings. Listings have been and always will be a fundamental method for selling real estate. However, we found these articles to be informative with regard to how some sellers feel about listings that aren’t selling and why that feeling lead them to choose an auction as a possible alternative. It’s always good to know what the sellers out there, and perhaps your own clients, are thinking.

“Auctions Gain Big in Popularity” - Realtor Magazine
In the above named article it states: “Auctions used to be associated with livestock and vacant land. But last year residential real estate auctions generated 14.2 billion dollars in sales, an increase of more than 23 percent from 2003. It went on to say “The National Auctioneers Association expects residential auctions to balloon to 30 percent of all sales in 2010.” Read the full article here

“As Sales Slow, Sellers Give Property Auctions a Try” – Real Estate News
This article states that “More sellers are putting their homes on the auction block in hopes of getting a quick sale.” It also quotes Alan Westerlund, a broker for Century 21, as saying that “Many sellers are looking for a finite time period to settle the sale. They are taking the home to the buyers by having an auction rather than waiting for the market to come to them.” Read the full article here

“Going Once, Going Twice ...” – Baltimore Business Journal
“Three hundred fifty-five days of the year, the gallery at Alex Cooper Auctioneers' warehouse in Towson is filled with antique tables, chairs, paintings and flatware. The remaining 10 days, the room is hopping mad with nearly 300 people from as far away as New York and Connecticut who are outbidding each other for a piece of Baltimore-area real estate, primarily rowhomes in the city…Two months ago, Alex Cooper auctioned off an 80-year-old mansion -- known as the Sherwood Mansion -- in the Roland Park neighborhood of Baltimore City for more than $2.5 million. The house had been on the market for about two years before the seller decided to auction it off.” Read the full article here

“Do I hear 10 million dollars? Looking For A Shortcut By Way of Auction” – From The New York Times real estate section

The introduction of the article refers to the former Chairman of General Electric, Jack Welch, who is known for his business savvy and who paid $100,000 to sell his Connecticut home at auction after it lingered on the market unsold. “…to them, an auction’s speed and finality, since no further negotiations may occur after the gavel comes down or a sealed bid is accepted, outweigh the marketing costs, which (are) usually paid by the seller whether or not the auction succeeds.” Read the full article here

“More high-end home sellers ringing auction bell.” – Houston Business Journal
“Tom and Carol Harper spent more than $100,000 in property taxes and upkeep expenses while their sprawling home in the ritzy Sweetwater community sat vacant on the market for three years. After becoming frustrated with their inability to sell the home … the Harpers decided to put the Sugar Land property up for auction … The auction attracted 27 bidders, including several high-profile players from the National Basketball Association, and the Harpers closed the $768,000 sale in 30 days.”

The article goes on to say that “Once viewed as a desperate attempt to get rid of an undesirable home in the event of a foreclosure or bankruptcy, some industry experts say auctions are becoming more popular as the first choice to sell a high-end home.” Read the full article here

“Going, Going, Gone!” – Florida Realtor Magazine
This article quotes an industry expert as saying “Most people think of auctions as having to do with distressed sales. That's not true. Auctions can work for every property, and they often bring in higher sales prices than you'd get by selling a home the traditional way."

High-end and desirable properties are standard fare for auctioneers. A house, which sat on the island of Venice, on the west coast of Florida, wasn’t fetching anywhere near its $435,000 listing price. No one had offered even $400,000. That’s when Buchner decided to go unconventional. Working with an auctioneer, the property sold for $450,000, a figure higher than its listing price.

Marilou MacKenzie, corporate auctioneer for Palm Beach-based Illustrated Properties, says that the properties her sales associates put up for auction sell from 87 to 108 percent of list or appraisal price.

As with all properties, sales associates and brokers must make sure that sellers have a reasonable expectation for the price a property will bring at auction. “If sellers have a fair price in mind, they do very well at an auction,” MacKenzie says. “Auctions always bring fair-market value, because the buyers are right there competing with each other.” Read the full article here

“Real Estate Fuels Live Auctions” – Daily Real Estate News
This article reports that the live auction industry has grown to $255 billion, and that the hottest category of all, residential real estate, grew by 4.4 percent in the first half of 2006, after an 8.4 percent increase in 2005 over 2004. Key to the increase is greater acceptance by both consumers and real estate practitioners. Forty percent of consumers who responded to a related survey say they believe residential real estate will be more frequently sold through live auctions in the future. Read the full article here

From Real Estate Broker’s Insider - “Auction Trend Grows As Traditional Brokers, Auctioneers Team”
“For years, a distinct line has separated traditional real estate marketing from auctions. The Multiple Listing Service is the accepted way to sell a home, while auctions are reserved for foreclosures or for unique situations such as the sale of a building full of condos. Those lines are blurred, though, as traditional brokers dip a toe into the auction waters.”

One example comes from RealtyUSA, a Buffalo, NY-based broker with 34 offices and 1,267 agents in New York State. RealtyUSA this year teamed with auctioneer Cash Auctions to form RealtyUSA Auctions.com. RealtyUSA president Merle Whitehead says a growing trend toward auctions piqued his interest. Whitehead said “You hear of people getting offers of $5,000 or $10,000 above the asking price.”

Also in this article, Steven Good, president of the Chicago Association of Realtors, says that the traditional brokerage industry is a zero-growth business right now and the auction business is a high-growth business. The article goes on to say that as the auction trend gains momentum, the foreclosure stereotype is lifting.

From The Real Estate Professional: “Consumers May Benefit From Real Estate Auctions”
This article was written by Julie Garton-Good, a real estate broker, and 3 time recipient of the Real Estate Educator Association’s “International Real Estate Educator of the Year” award.

When does the auction method work best? Initially used for distressed properties and/or distress type situations like pending foreclosures, today it may be the best answer for most any situation. And who says you have to auction the property at the property. An increasing trend for multiple parcel auctions is to hold the sale in a hotel ballroom, complete with multi-media presentations and sparkling cider! How much more cost and time-effective could it be than to sell five properties in a less-than-two-hour presentation?

As for determining market value - the auction method is perhaps the best determinant since you have ready, willing, and able buyers together openly bidding on the property.

Other useful links:
http://www.realtor.org/libweb.nsf/pages/fg418