Thought the 2008 housing market crash came with a thundering boom, there was a silver lining in the cloud that came along with it. That silver lining was the auction market. While is seems odd, the sector was the saving grace of a decimated market as the foreclosed properties that were in the rubble became an opportunity. The net result was lower housing prices and an increased interest in the auction market.
Many thought of the auction market as only a temporary fix that would soon evaporate. Years later, the reality is that the auction market is alive and well.
The real estate market recovery continues to put the auction market in the limelight. Rick Sharga, executive vice president of Auction.com, said in an interview with The Wall Street Journal a 120 percent increase has been realized in the number of properties sold at auction compared to five years ago.
The data and statistics point to the fact that there is still a tremendous increase in the real estate auction market. This increase is not limited to the industry alone, but to external forces such as seen in Google’s investment in Auction.com.
Shawn Terrel, vice president of United Country Auction Services, said to Realty Today, “Google is a very smart and disciplined company which may have a multitude of reasons for investing in the online auction industry.” Terrel informed Realty Today, America’s leading rural auction agency, of the venture via email.
Terrel continued, “Google’s ability to obtain direct auction sales data could become a very important piece of the equation. It will be interesting to see how they interact with the recent investment, but from the outside looking in I believe Google’s investment of Auction.com is a very positive sign that the real estate industry is being noticed and that United Country Real Estate will continue to have a very bright future as we continue to build and be dominant in the sectors of the real estate information and marketing services we serve.”
UCAS, the auction division of United Country Real Estate, is intent on leading the auction industry and has built an intensive auction service framework over a period of seven years. That effort has seen UCAS account for 20 percent of its parent company’s annual sales, which includes more than $500 in 2012. This achievement found itself being listed atop of Land’s Report list of “America’s Top Auction Houses” in 2013.
According to Auction .com, UCAS sold more than $7 billion of commercial and residential properties in 2013, while Concierge Auctions has sold luxury properties in excess of $500 million since 2008. Of recent interest is the company attempted to sell the estate of Michael Jordan located in Highland Park, Illinois. Unfortunately, the attempt was unsuccessful.
Ever improving technology is at the heart of these changes, which Terrel considers the major reason for change and the impetus behind the growing auction industry. He said, “The growth and development of auction technology has allowed consumers to become mobile, yet still connected. Internet auction bidding platforms provide that [instant buying and selling] mechanism to consumers, allowing them to participate in auction events from virtually anywhere, at any time. The United Country Real Estate and our Online Auction Bidding platform receives between 5 – 7 million visitors collectively each month, which is setting the industry standard.”
There are currently a number of real estate auction apps available for mobile operating systems such as Android, iOS, and Windows. Both Auction.com and UCAS have apps specific to the iOS platform. Both allow users to view for-auction properties and participate in real time auction pre-bidding and bidding.
Terrel believes that the drastic technological change to the auction industry landscape is only the beginning of a continued boom. He remains confident that for the near future, technology will be one of the primary driving forces in real estate marketing. “I believe we will see a much stronger majority of residential and commercial real estate in this country being offered to the public via the auction method of marketing in the foreseeable future.”
According to Terrel, the value of the real estate data will soon have more value and be more indispensable than the actual inventory. Any causal activity can be connected to a particular kind of property a person may have an interest in. For example, a set of golf clubs is purchased for $500. There is a potential link between the interest in golf and a golf course property or a property within the general location of the golf course.
In order for the auction market to reach its full potential, realtor training and education about the pent up advantages and possibilities that are present in technology must be given to realtors. Few people are currently educated and experienced in the field, leading to the imbalanced ratio of realtors-to-auctioneers. The numbers show, according to Terrel, that the ration is approximately 30,000 auctioneers with specialized real estate training versus the more than 1 million realtors in the country.
Terrel admits that one of the major hurdles the real estate industry must leap over is to recognize the importance of realtor training. “Realtors are going to launch the auction offering into their traditional real estate business eventually, and I believe it could seriously impact the auction industry negatively if we do not help realtors get started off on the right foot with proper education and training.”
The New Normal?
Birchwood Credit, Inc. released a January report that said the number of auctions in January, 2014 increased by 75.10 percent in Chicago. That compares with the year before which recorded only a 28.41 percent increase on a year-to-year basis that was in a previously marginalized field.
According to Realtor magazine, private owner auction sale demand grew faster than foreclosure auction sale demand in 2012. The number of people choosing auction sales increased expectedly to the point where companies are becoming pickier about who they allow into an auction. The Wall Street Journal reports that Concierge Auctions has narrowed its acceptance rate to 1 of every 25 applications it receives.
Terrel says this trend is not just a one time event. “The importance of auctions in the real estate marketplace is that they will eventually become the primary method of selling property.”
Bidwin.org is an online real estate auction web site and platform based in Canada with its headquarters in Calgary, Alberta.