Auctions growing in popularity as real estate market booms

·5 min read

Jun. 19—The extreme competitiveness in the current real estate market can be boiled down to classic supply and demand.

The United States is underbuilt by millions of homes, making inventory far too low, and with three generations now in the buyer's market and low interest rates to boot, there are significantly more people willing to buy homes than there are homes available.

By now, the headaches associated with traditional real estate transactions are becoming commonplace.

Some buyers are spending months on end combing Zillow and looking for the right fight, only to come up empty when home prospects immediately enter into-multi-bid situations or leap out of their price ranges.

Some sellers are opting to stay in hotels due to so many showing requests, then entering the back-and-forth of accepting an offer, going into a pending sale, waiting for inspectors and appraisers, and often doing so as they enter the buyer's market themselves.

An increasingly popular way to combat the murkiness of the traditional market has been an old standby: The classic auction.

As the market stays hot, local auctioneers are seeing more buyers and sellers alike considering the alternative to the traditional home sale.

"The best thing I can say is the real estate auctions are going really well," said Jack Amlin of Amlin Auction in Holland. "We're seeing really heavy, competitive bidding, great turnouts at our auction, and our prices are up, too."

The extreme seller's market is at levels that some real estate professionals have never seen before.

Beth Rose, whose real estate and auction company bearing her name is headquartered in Maumee, said one home in western Lucas County that recently came on the market had 74 showings in one day.

Ms. Rose said it's now common to draw a dozen or more offers on a traditionally sold property, but she still listed one of her recent Perrysburg homes for auction so more people would have a chance to bid. The same day it was posted to Facebook, she said she received 50 calls — simply because the home was affordable and in Perrysburg.

The openness of auction proceedings, she said, is why they are drawing more interest from both buyers and sellers.

"Auctions are more popular than ever, and the reason that auctions are so popular is because it's the most transparent form of bidding in these highest-and-best offers," she said.

The state of the housing market, however, has not just changed interest in auctioning, but also their timelines.

With this much interest on the buyer's side, Ms. Rose said it is no longer uncommon to hold an auction a week after listing the property.

"What has changed for me is that we have considerably shortened the time that it takes to get the market to react," she said. "Some of my auctions are in a week. Back in the day, pre-pandemic, it was 30 days of marketing time, then have an auction. Well, 30 days today is an eternity."

The lack of home inventory has been exacerbated especially in rural communities west and south of Toledo, where smaller populations and often larger parcels contribute to fewer overall homes and, now, scarcities of homes for purchase.

Jason Whalen of Whalen Real Estate & Auction, which has locations in Wauseon and Neapolis, said buyers looking for more acreage are having significant trouble finding anything that matches their wish list.

"It just seems like there's not enough rural properties out there for sale, so a person who wants 5-acre, 10-acre parcels — it's just not out there," Mr. Whalen said. "There's just none for sale."

Mr. Whalen said it's a misconception that an auction automatically means that a home has something wrong with it or there was a foreclosure.

Rather, he said, an auction can be an effective technique, especially for rare homes in low-inventory categories — like rural properties with acreage — that are attracting a very specific segment of buyers.

"The reality of it is, through our eyes, it's a marketing strategy that can work well for both a buyer and a seller," he said, calling the auction a win-win for both sides of the sale. "It's open, everybody can see it, everybody can participate — no shenanigans."

Ms. Rose also said that auctions offer something to both buyer and seller.

Buyers can watch 100 percent of the bidding process on a property in which they are interested; the seller does not have to disrupt their lives for showings or worry about contingencies.

And it's all finished in one day.

"It's the cleanest contract in real estate — it doesn't get better than that," Ms. Rose said. "Everyone is having auctions right now, they're just minimum bid auctions that are almost like sealed bids. Why not open this up to an even broader market and let everyone fight for the property?"

Mr. Amlin said he considers auctions "hassle-free" for both sides of the equation.

However, with the market being so competitive, using an auction as a marketing strategy has become more attractive because there is little mystery around it — and that's often why people come to like it, Mr. Amlin said.

"With live auctions, people know that, when you walk away, it was fair," Mr. Amlin said. "Somebody won and somebody lost, but it was fair. That's what we're hearing more and more now about the auction method."

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