The real estate industry is expanding with great virility, as a result of the evolution of online auctions.
“Real estate auctions aren’t just for ugly foreclosures that banks are desperate to get off their books,” said founder and CEO of Sharp Auction Engine, Keith Sharp.
Often times, online auctions allow homes to be sold more quickly than a traditional listing and many times at a higher price, making auctions an attractive option for sellers.Online auctions are not just a benefit from the seller’s standpoint. Buyers are reaping the fruits of the auction industry as well, finding a flood of bidding opportunities and dense deals.
The numbers echo the anecdotal evidence.
Auction.com, an e-commerce website focused exclusively in real estate, proved the power of online auctions in non-distressed home sales with the sale of a 93-year old man’s seven-bedroom, nine-bathroom, beachfront estate in Corona del Mar, California. The home sold for $5.3 million-$1.8 million higher than the opening bid of $3.5 million. Auction.com’s prolific success inspired a slew of similar sites such as Hubzu, Xome, Sharp Auction Engine, and RealtyBid.
Many of these online auction sites are experiencing equally-comparable triumphs. Sharp Auction Engine, an online auction platform launched in 2014, reported record-worthy numbers with over $100 million in real estate transactions exchanged on its e-commerce site.
While some contend that buyers are uncomfortable bidding on and buying a house they have never seen in person, people are becoming more and more comfortable with this capricious shift in industry practice.
In fact, Millennials (adults ages 18-34), which make up 68 percent of first time home-buyers, prefer high-tech transactions. According to a recent article by USA Today, the age group makes 54 percent of its purchases online, up from 51 percent last year and 5 points ahead of the 49 percent of online purchases made by non-Millennials. Real estate in no exception.
This growing trend has much to do with society’s taste for instant gratification.
“The immediacy of auctions is a draw for both buyers and sellers,” said Sharp.
The process is much faster than cursory listing techniques. Because most online auctions require buyers to be pre-approved, the transaction process is significantly streamlined.
It typically takes 65 days for a home to sell when listed by a professional agent, according to an article by Realtor.com. The online auction process is considerably faster than the conventional “list and wait” procedure, taking an average of one week to complete the transaction.
These deeply accelerated timelines are allowing agents to sell properties with increasing frequency, generating more money in a shorter period of time.
Because of the prosperity online auctions have provided, real estate agents have become some of the online auction industry’s most prominent stalwarts.
“Many agents are under the false impression that auctions are trying to replace realtors. Agents are not being ‘cut out’. Agents typically receive 50 percent of the 10 percent commission the auctioneer takes from a sale. In my experience, both as an agent and auctioneer, the auction business has always acted as a powerful tool on either side of the equation,” said Alabama auctioneer and real estate agent Beau Cole.
Online auctions will never touch the cerebral capacity that established agents provide; however, they will serve as a defining catalyst and resource for realtors in an internet savvy society.
This phenomenon is transforming transactions across the country and dramatically changing the real estate landscape.
“The buyers and sellers of tomorrow are looking to online auctions,” said Sharp.
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