Bidding for Business: Online Auctions in an Evolving Real Estate Industry
The real estate industry is expanding with great virility, to include 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.
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.
Auction.com, an e-commerce website focused exclusively in real estate, has proved the power of online auctions in non-distressed home sales as well. 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 success. 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.
Consumers are becoming more and more comfortable with this additional transaction-based platform within the industry that often times requires bidding on and buying a house they have never seen in person.
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 is 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.
Often times, online auctions require buyers to be pre-approved, so the transaction process is significantly streamlined.
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 up to 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 serve as another tool and resource for REALTORS® and their clients to consider in an internet savvy society.