This seems very interesting. Listing agent gathered all the potential buyers and conduct live auction right there at the house. No more guesswork.
Is he a licensed auctioneer? I know that auctioning is something regulated by some or all states.
Anyway, I wouldn’t hire him to auction my pair of boots from 1990. It was as boring as hell! He didn’t put any emotion into it. I can do better, believe me.
If you didn’t notice it, most people like they didn’t want to be there to begin with.
The only thing good about this is that you would know live as to the number you have to beat in order to win the house. However, as anyone who has fought others for something on eBay, one might go well over to win it. You would think on a major purchase like a home people would know when to fold them, I can still see people getting caught up in the action and spending too much to win. Also, a lot of people are very touchy about their identity and they may not want people to visually know that they are financially able to buy the home for fear of crime or unsolicited attention.
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I think this is how they sell houses down in Australia. So it can definitely work. This format “encourages” people’s animal spirit. They may get caught up in the moment and just do whatever to win it. More money to the seller.
There are auctions at courthouses everyday…auction.com…and other sites.
Right, but the courthouse ones are pretty much strictly 100% cash only correct? I could be wrong but these seem to be the normal way (min approved for financing) with just the open bidding as a twist.
I think this is bad for the seller. With unknown. if someone really wanted the house, they will overbid a LOT just to make sure they win the bid. With auction like this. the buyers will know their competitor what’s in their hand by looking at their face. On the other hand, maybe the agents can work together set up a fake bidder just to bid it up as well. So i don’t think it’s a good and fair process.
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Lots of room for abuse. …Buyer may not get the loan…Due diligence issues…bid rigging, fake bids…
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Yeah, I don’t know how they could police it so that only bonafide, approved and interested buyers are present at the auction. I agree with you that the sealed bid process seems to be all around a better way to do it, in terms of protecting both parties really. But I suppose the folks that are arrogant and want to duke it out publicly for a house would like the rapid fire auction platform. Interesting. I have never been to a courthouse stairs auction event to really know how it plays out. If I remember correctly, wasn’t there a gang of investors who colluded to bid accordingly on public auctioned properties and they got busted?
Some people are so proud, full of chit, they don’t want to be seen buying a house where they lose to a ridiculous $400K and with the fear of being called losers.
Yes, manipulation can be put in place.
The only thing is that if this is for real, it weeds out the famous cash guy that takes advantage of that situation. Well, meaning that the buyers present weren’t specifically called because of that fact, being cash buyers If not, a plain field where everybody is the king of their own kingdom.
I am still not drinking the cash buyer wins Kool-Aid. I have had friends sell their places and for the most part the winner was a conventional loan buyer. Sure, some may have sizable downs but still it wasn’t all cash necessarily. Again, if I were selling, I want TOP dollar with the fewest contingencies. That is key, right?
If they haven’t pre-qualified the buyers as to know who is a cash buyer and who isn’t, that auction would be a good thing.
On the other hand, in cases where you smell prices may go down, you better grab the cash buyer. Right?
I’m thinking it would be pointless to include people who are not already qualified to buy (cash or financing).
The difference would be an increase in transparency, speed, and knowing exactly where you need to be.
In a sealed bid transaction the guarantees of a genuine bidder are the same as an open auction. It’s no different except that the open auction adds the component of being able to see the competition face to face. That’s a bonus to transparency. I’m betting most buyers here would welcome knowing exactly where you need to be pricewise. 90% of putting in an offer is figuring out the price, 10% is deciding to do so. A faster more definitive process is a benefit. Buyers and sellers don’t have to sit around being anxious for days for a negotiation to be finalized.
One more pretty significant benefit for trust/transparency is that you can eliminate the ability for a pocket-type listing where buyers get shutout for a double ended deal or a deal to a buddy.
In the spirit of promoting a more efficient marketplace it seems to be a good idea.
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I get it, it sounds theoretically a good way to do it. But, what about fake buyers there pushing up the pricing? How about the “Ebay Effect” where buyers get all caught up in the bidding action and go well over what their true intended limit was? I think I would be fine with it, but some people truly do not want people to know their identity (again an agent will be present then for them?).
Agree with Dio, closed auction might get wild overbids.
I went to an auction at that 8 Orchids building in Oakland Chinatown. Basically looking for a deal, but IMO everyone overpaid. I guess once you go through all the prequalifications and choose an apartment, fly your relatives in from China, it really gets you motivated to close
Interesting. So, what did these places go for exactly? Are these 2 bds/1 baths?
There was a variety of studios, 1br, 2br. Here’s 2/2 that went for $600k in 2007 and now on market for $750k:
Not all units were auctioned. They held some back, but I bet they wished they auctioned everything in 2007!
Here’s one that went for $506k in 2007 and sold for $435k in 2015. Ouch.
Thanks. Looking at it, is it really worth that much (750k)? Nearly $500 in HOA too? I am really curious as to what this goes for in today’s market.
See my edit with the second listing.
Those who bought after the auction in 2008-2012 seemed to do much better