Real estate auctions: more common than you think
The pending auction sale of a Marblehead Oceanfront property (click 11 Crown Way auction for details) has generated a lot of interest in and enquiries about the auction process, something which in many countries is common, especially for higher end properties.
In the US property auctions used to be associated with distressed sales, but they are an increasingly active part of the real estate market. And they are more common than you might at first think.
Merriam-Webster defines an auction as “a sale of property to the highest bidder.” There are many types of auction. Think of going to a charity event where there are often two auctions: a public one, where an auctioneer conducts a live auction amongst the people in the room; and a silent one, where people write their bids on a sheet.
Now consider what happens very frequently these days, when a property is listed for sale and the listing agent receives multiple offers. The agent will go back to the agents or buyers and ask for “best and final” offers. This is now a private auction, but the buyers do not know what the other bids are. Many buyers are stressed because they keep bidding unsuccessfully on properties, or are concerned that they may overpay – or worse, that they lose the property for a few thousand dollars at a price they would have been willing to pay.
Against that stands a public auction. Normally, a full information package is prepared by the auctioneer, often working in collaboration with the listing broker, and potential buyers are invited to visit the property with a contractor or architect as they choose. And then comes the auction; and on that day, the market price is established in an open and transparent manner.
The combination of a known time frame and transparently open process suggests that auctions will continue to grow in popularity.
For more information about the growing market in auctions read Mansion Global’s Luxury Property Auctions: a Thriving Avenue for Sales Globally.
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Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated