Does the word auction bring to mind police-confiscated drug vehicles, dilapidated city housing, or Sotheby’s Picassos? In American culture, people often associate auctions with defective assets that sellers want to unload quickly, and buyers gamble on for sight-unseen goods. The opposite end of this spectrum is incredibly high-end objects, such as collector cars or antiquity art, which are often out of reach for most folks.
At Luxea Global Auctions, we want to redefine how you think about the phrase real estate auction. Auctioning property harkens back to mid-1700s Europe, where the gavel clap commonly sold off estates in taverns and coffee houses. Since then, many countries worldwide have used the auction model as a mainstay for moving property due to its sense of certainty, urgency, and transparency.
We want to introduce you to a way real estate is commonly done worldwide, where both the seller and the buyer benefit. Using this way of selling property drives up demand, keeps all transactions in the public eye, and creates a far-reaching range of potential buyers in niche markets. It allows for quicker sales, proper market-value assessment, and an overall sense of fairness and transparency.
The Way Real Estate Auctioning Commonly Happens Around the Globe
In Australia, a country that accounts for the 14th largest global economy with 66% homeowners, auctions have been the primary real estate transaction method for the past 60 years. It started with rural livestock auctions, which transferred to property auctioneering methods. Today, major Australian real estate companies such as Barfoot & Thompson’s Real Estate and Belle Property say auction real estate accounts for 70-80% of how they do business.
The seller sets a bottom-line limit for the sale of their property. Ideally, the bidding goes higher, they are assured that they won’t sell for an under-value price. Because of this, auctioned real estate in Australia typically moves quickly, with sales generally taking around 35 days as opposed to 60 plus days of traditional agent-driven real estate. There’s also a large success rate due to the farther-reaching marketed audience. Even before online auctions, it was common for a hundred or more people to show up to a live auction.
South Africa, a country with over 60% homeowners, also commonly uses the auctioneering model. In market economies that can be somewhat unstable, South African auctions allow for a fair value of sale to both the buyer and the seller. The wide-reaching ability of the auction allows for more bidders, creating more demand and value. The public transparency allows for more information around actual market supply and demand.
In Ireland, a place where home auctioning is common practice for 67% of homeowners, sites usually allow for pre-auction property surveys, creating buyer confidence in their purchase and no haggling with the seller after the offer is accepted. In addition, auctioning lends itself to online buying. And due to the pandemic, Ireland has seen a 200% year-over-year increase in online real estate buying in 2020 with a 50% increase in international buyers.
How the U.S. Is Making the Transition to Online Real Estate Auctions
As the U.S. transitions to online real estate auctions, we have a few differences in how it is done and why. For starters, unlike Australia, auctioning in the U.S. needs a mindset shift to normalize. Until more recently, auctioning has been reserved for selling off massive swaths of land and high-end luxury properties instead of the typical way of daily real estate operations.
In addition, although recent events have shaken our economy, the U.S. still stands at number one on the GDP economic stability scale, which is quite different from more volatile economies like that of South Africa, which ranks at 41. So, although our market will fluctuate, auctions serve the purpose of boosting the value of properties that already stand on a stable economic foundation as opposed to maintaining investor good faith.
Similarly to Ireland, we’ve seen a massive uptick this year in online real estate auctions. In the first eight months of 2020, the U.S. saw a 255% increase in online auctioning sales from 2019, which means this new way of doing things might be here to stay.
How to Navigate a New Way of Doing Business in Real Estate
As these new ways of doing business take hold, at Luxea, we want to make sure that both sellers and buyers navigate the process with comfort, ease, and all necessary information. We want our real estate auctioning to provide a sense of certainty, urgency, and timeline control for sellers. That’s why we provide bidding metrics with real-time feedback and no punitive fees for deciding not to sell.
We want to provide a sense of transparency with lots of options to find your dream luxury real estate property for buyers. Our online platform shows you where your offer stands compared to other bidders, as well as access to an array of unique properties. It creates buyer premiums as low as 5% and never greater than 10%, opening bid incentives, and no set cost, which would price out some potential buyers.
We create some of the best contract terms for both parties, multi-offer bidding, a worldwide network of real estate markets, normal expected close fees, and hands-on help from our team.
And although this way of selling real estate on a mass scale is new to the U.S., it’s normalizing quickly. At Luxea, we believe that auctions allow both buyers and sellers to see the intrinsic value of doing business this way. We want to help usher you into this new wave of how property can be quickly and effectively sold.
Contact us today to find out more about selling or buying luxury properties through our auctioning platform.