Is This the New Magic Bullet? Real Estate Auction Buzz in the Phoenix Metro Area

With the real estate market slow down, over 53,000 listings in the Arizona Multiple Listings Service as of today, and properties taking longer to sell, home owners who want to sell are looking at every possible means of snagging a buyer.

The new buzzword is “Real Estate Auction.”

February 24, 2007
Home sellers try unusual method with auctions

Misty Williams, Tribune

With the housing market lagging and homes taking months to sell, a Scottsdale-based company is betting homeowners will be eager to try a more unconventional route to successful sales — the auction.

National Real Estate Auction Corp. will host a massive real estate auction in downtown Phoenix next month — offering everything from starter homes to multimillion-dollar estates.

Home auctions have been around for decades but have gained popularity as an alternative tool for selling in a slow market where competition is tough.

Valleywide, there are more than 45,000 properties on the market — at least 10,000 above the norm. Auction signs attract attention, said John McCann, one of the company’s founders. “It creates a lot of buzz and excitement about the property,” he said.

Real estate auctions are not new. In fact, this method of selling can be traced back to 500 B.C., and is as current as eBay. In a nutshell, an auction is a venue where buyers and sellers get together and goods are offered for bid and then sold to the highest bidder. If you remember Economics 101, an auction is a method for determining the value of a commodity that has undetermined or variable price. In other words, the buyers determine the value by the amount the highest bidder is willing to pay. I wonder if this is why people all of a sudden are thinking that buying or selling a home at auction is a good idea?

A local auction company, National Real Estate Auction Corp, says that buyers and sellers benefit equally from real estate transactions at auction. Buyers make deals at fair market value, avoid dealing with sellers who are hesitant, and don’t have to negotiate. Sellers are getting fair market value for their properties, properties close quickly with no contingencies, and the seller maintains control.

Their next auction is scheduled for Saturday, June 16, 2007, at 9:00 AM, at the Phoenix Airport Marriott. It will be interesting to see how many properties will be offered at auction, and how many will actually be sold and close escrow.

Auctions may not be for everyone, and you still need to understand the terms before you either buy or sell at auction. Still, in a tight market, it pays to look at all options.

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