We are going to see a lot more properties using the auction process once we take the padlock off our economy.
Auctions are no longer the sole domain of banks that hold foreclosed properties and want to turn them into cash, or the 30-acre $100 million estates built by a Hollywood mogul that has sat on the market for years.
Auctions have changed with the times. They are now more user-friendly and have elevated their service to concierge levels. Not to mention, in the age of social distancing, more sellers are seeing the appeal of not having to show their homes.
I have a unique property that’s a bit of a unicorn, so I reached out to Brad Hermes, a top agent in the Houston market and advisor for Concierge Auction, to explain the process to me.
“Auction houses changed their business model some time ago,” said Hermes. “They made a calculated business decision to reach out, work with and embrace the Realtor. This has resulted in benefits for buyers, sellers, the agent and the auction house.”
When I asked Hermes who the most likely candidates were to sell their house at an auction, he said that the market used to be reserved for exceptionally expensive homes or for very unique properties, but that’s no longer the case. He says he routinely sees properties going to auction around the $2 million figure.
“Unique properties that find themselves on the market for two or three years have begun accessing the auction process to quickly access cash,” he explained.
If they want to hold out until that perfect buyer comes around, then so be it — but often the numbers work against that strategy. When you account for the mortgage payments, maintenance and taxes, most sellers realize they would have benefited financially by getting their equity out of a home quickly. Sellers turn to auctions when they want certainty that it will be sold.
Auction houses work hand-in-hand with the seller and their agent to give the property the best chance of success. Psychologically, by creating a date on which the property will sell, an auction takes an edge away from buyers and gives it to the seller. This approach can result in more than two participants leading to the coveted “bidding war.” Let’s face it, few people possess an ego immune to not wanting to lose an auction once they begin bidding.
Some of us are going to be entering the most challenging time of our professional lives. For those people, it makes good sense to consider all options to close deals, including auctions.
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