Home sales stalled? Auction that house!
Home sales may be headed lower. So sellers and even real estate agents are turning to auctions instead. Are home sales auctions for you?
When Justin J. Manning (third from right at the table) auctioned this home in Falmouth, Mass., last year, the house was packed with bidders. With home sales stalled, sellers and even real estate agents are turning to auctions as an alternative.
Courtesy of JJManning Auctioneers
When Stephanie Seacord and her sisters were preparing to sell the contents of their childhood home just outside Boston, an acquaintance in the auction business asked if she'd considered auctioning the house.
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With her mother's nursing-home bills mounting, the allure of selling the house quickly and "as is" was too good to let pass. The auctioneer advertised the event, held three open houses, and last October the 1830s Federal-style house on one acre went on the block.
Bidding started at $200,000, dropped to $150,000, and then rose to a final sale price of $225,000. It was over in 20 minutes. By December, the family had a check in hand. "I honestly believe the price that was got at auction that day was what that house was worth and what the market was willing to pay for it when we needed to sell it," Ms. Seacord says.
Weary of watching their homes languish under "For Sale" signs in a sluggish market, homeowners increasingly are turning to auctions as a viable alternative. Residential real estate has been one of the fastest-growing segments of the auctioning industry. According to the National Auctioneers Association (NAA), based in Overland Park, Kan., the sector accounted for nearly half the industry's growth between 2003 and 2008.
Auction sales were booming even at the height of the housing market, says Chris Longly, deputy executive director of NAA. He attributes some of the uptick to the popularity of sites like eBay. "Consumers today want it now," he says. "We don't want to wait around or negotiate and, more important, we want to pay the price we want to pay."
Although a popular way to sell homes in places like Australia, and a growing trend in New Zealand, real estate auctions are generally seen as a way to unload distressed homes in the United States. Now, that could be changing.
"The auction model generally is a great market-price discovery tool, even for luxury properties, if positioned properly," says Vlad Sapozhnikov, cofounder of BidOnTheCity.com, which offers high-end residential real estate in and around Manhattan in simultaneous online and in-person auctions. "One of the major challenges of today's luxury real estate market is to properly price your property," he writes in an e-mail. "One of the biggest mistakes you want to avoid as a seller is to overprice your house or apartment and stay on the market for too long."
