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Home Auctions - good, bad, your opinion?

By Troy Erickson AZ Realtor (602) 295-6807

Real Estate Agent with HomeSmart License # SA577557000

September 10, 2008 09:11 AM

There was an article recently in our newspaper about how home auctions are gaining in popularity, partially because we still have around 50,000 homes on the market in our area. One recently held auction included 227 properties in the Phoenix metropolitan area, and was the most ever in a single U.S. auction. The reason many sellers turn to auctions is because the auction "creates a sense of urgency in the marketplace where there really is no urgency," says John McCann, President of National Real Estate Auction Corp. Auctions are actually thriving in markets where there are a glut of homes for sale.

Auctions have grown nearly 47% from 2003 to 2007. The sales generated from home auctions in 2007 was $58.5 billion, lower than the popular auto auctions that generated $87.8 billion in sales. Most property auctions include web-based and live bidding. The business model works because it brings together hundreds of buyers in one location, whether it's virtual or physical.

What do you think about homes being auctioned? Anyone have an experience with this?

GENERAL AUCTION PROCESS:

1. Auction firm lists homes on websites to be sold at upcoming auction.

2. Prospective buyers register online to participate in auction (Pre-registration not always required)

3. Homes being auctioned are available for inspection for a specific number of days before the auction.

4. Buyers can make an offer prior to the live auction in most cases. If seller accepts price, the home is excluded from the live auction.

5. Bidders must provide earnest money to participate in the live auction in an amount that ranges from $1,000 to $5,000.

6. It is highly recommended that bidders pre-qualify for a home loan up to the amount they are going to bid on a property. Bidders who fail to qualify for financing will lose their earnest money.

SOME ONLINE AUCTION SITES:

National Real Estate Auction Corp. - www.myhousebid.com

Hudson and Marshall - www.hudsonandmarshall.com

Real Estate Disposition Corp. - www.ushomeauction.com

Williams and Williams Marketing Services Inc. - www.williamsauction.com

First American REO Servicing - www.reosource.com

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David Slavin

Keller Williams Premier - Katy, TX

CDPE, ABR, SRES Keller Williams Premier

I think there should be a limited use of auctions in real estate.

Sep 10, 2008 09:47 AM

Eric Egeland

RE/MAX SUBURBAN - Libertyville, IL

SFR, e-PRO, CDPE

Thanks for the post Troy,

In my opinion the auction process doesn't work very well unless it is a larger commercial space. For a single residence it would be tough to get a fair market....at least it doesn't work well here in Chicagoland

Sep 10, 2008 09:55 AM

Ron Tarvin

Residential, Investment properties, rehab projects, property management, luxury homes, new construction! - Katy, TX

Broker, Katy, Houston, Cypress 77450,77494,77095

I think that auctions are mostly misunderstood by agents, buyers and sellers and it is this lack of knowledge that keeps auctions from gaining popularity. Ultimately, I don't think that it will be the best avenue for real estate.

Sep 10, 2008 10:03 AM

Troy Erickson AZ Realtor (602) 295-6807

HomeSmart - Chandler, AZ

Your Chandler, Ahwatukee, and East Valley Realtor

David - Good idea, not sure how that could be implemented.

Eric - Not sure if you have 50,000 homes on the market (in Chicagoland), of which many are preforeclosures, foreclosures, or REO's, but that is what seems to be generating the big interest in auctions here in Arizona. It is a way for sellers to make it seem like their home will be sold on the day of the auction vs. other preforeclosures, foreclosures, and REO's that have no deadline, so buyers wait and wait and wait.

Ron - Because of the way the housing industry is right now, auctions are becoming quite popular with the sellers. Like the article said, over 227 homes were up for sale in one auction recently. I have a feeling they will grow in popularity until the market takes a turn for the better.

Sep 11, 2008 08:37 AM

Aaron Majors

Portland Realty Hub LLC - Portland, OR

CNE. Principle Broker

I am starting a home auction business and have had promising results so far. There are different types of auctions. I used a "sealed bid" auction in my marketing plan at the end of a listing period. It works so well that I started www.PortlandHomeAuction.com. I am about 1 week from having the design guys produce the finished product. I'm so excited. I should have even greater success when it's completed. It's so wierd to have sellers and buyers calling me in this market. I LOVE it!!

Feb 28, 2009 06:29 AM

Aaron - I'm glad to see that you have made the most of the current real estate industry. I am sure you will have some success in your auction business. Is there anything special you had to have or do to create this?

Feb 28, 2009 06:34 PM

Home Auctions - good, bad, your opinion?

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