Online auctions through firms such as eBay are not the only type gaining popularity.
According to the owners of a local real estate auction firm, selling properties through public auctions is one of the hottest trends in the real estate sector ? and the proof of the trend is in the company?s own record growth.
“There has been a dramatic change in the attitude of consumers about how they feel about auctions,” said John Brown, partner and chief operating officer of Express Auction.
“About 10 years ago, most people interpreted auctions as foreclosure sales. But today, because of the advent of eBay, auctions have become ? particularly in Baltimore ? the thing to do.”
Since taking over Express Auction in 2001, Brown and Don Miller, the company?s partner and director of sales, have seen public auction revenues skyrocket from about $4 million to nearly $50 million in 2005.
Similarly, their employment base has gone from five individuals to more than 30 and the company last year relocated to a 6,000-square-foot facility in Catonsville to accommodate growth.
Brown and Miller attribute the growth in auction sales to a variety of factors, including the strong market overall in the real estate sector.
“Auctions have been able to achieve very high prices because of the market itself,” Brown said. “There is so little inventory out there that it really gives people the opportunity to purchase something where everybody is on the same platform.”
For the seller, Miller said the major benefits of selling through an auction are that the property is sold “as is” as a cash transaction and that properties that would otherwise sit on the market for as long as 180 days can be sold in four to six weeks with a settlement of 20 days. Another enticement to sellers is that the buyer pays the company?s commission and all costs associated with the ownership transfer. In auctioning the properties ? except in the case of “absolute auctions” ? a minimum price is set and is outlined in marketing materials associated with the sale.
“From a seller?s standpoint, if they?re a little flexible in price, auctions can be an excellent avenue,” Miller said.
But Jim Kelly, an assistant law professor at University of Baltimore, cautions buyers that casual investment in auction properties does carry its risks.
“People underestimate the liabilities that go with real estate, and while most real estate properties do not have significant environmental problems associated with them, there is always the chance that properties canbring serious liabilities,” Kelly said.
“The auction process often does not facilitate the due diligence that really speaks to risk assessment.”
