Auctions: Going, Going, Gone?
Last weekend, one much bruited auction was held here in the Florida Panhandle. Properties offered ranged from luxury condos to vacant tracts of land. One prominent auction house had 15 different properties that went under the gavel.
How many properties sold out of all those offered? Not one.
So I was a bit nonplussed when I opened my email this Monday morning after to find a message from one of the prominent auction firms: “Agents, are you tired of your property not selling?”
The irony was inescapable.
While auctions have had a good run of popularity in the recent market, the fact is that more recent auctions have sorely lacked bidders. What bidders there are have grown very wary, each waiting for the other to bid.
Truth be told, auctions did not consistently deliver value to the Seller even in their recent heyday. One case that we encountered involved a luxury condo that was up for auctioned twice and did not sell on either occasion. Of course, the auction company does not refund the marketing fee they have collected (ranging typically from about $3,000 to $10,000). The auction did not bring in the required amount, so the property did not sell. In a matter of a few weeks, La Florida sold a condominium that was approximately the same size in the same building. The sales price? Greater than the highest bid on the most recent auction–$1.895 million.
We wonder what will happen to those properties that don’t sell. In the eyes of the market, these unsold properties have been tainted by the abortive auction. The Sellers have significantly narrowed their choices of how to proceed.
It will be interesting to observe if auction companies change their business models to respond to increasingly knowledgeable Buyers and Sellers. Meanwhile, these companies might do well to consider the old saying: “The definition of true insanity is to do the same thing over and over again, and expect different results.”
