About 8 years ago I had the privilege of working with a buyer who was also a principal in one of Sydney Australia’s largest real estate firms. Not only was this gentleman stunned at the inefficiencies of the American housing market, more specifically New York City, but he was also surprised that we were not utilizing the power of the auction when selling homes.
Residential auctions have long been associated with foreclosures in the United States, but according to The Washington Post, Alex Cooper Auctioneers Inc. has auctioned off $80 million in non-foreclosure real estate (commercial and residential) in the past year.
Now most people who have purchased property over the past 5 years in NYC would argue that they were involved in an auction. The market has been so hot that most have people find themselves bidding against multiple people and often experience the frustration of bidding significantly over the asking price only to be outbid by someone else willing to through more cash on the table. But, that’s not really an auction.
The way I understand the Australian market is that homes are shown for a couple of hours (open houses) two days a week (perhaps Tuesday and Thursday) and then all bids are taken the following Monday when the "auction" begins.
This seems on the surface to be a fabulous system for a hot market, but you must have more than one active participant for an auction to work. In a cooler market as we are currently experiencing, I believe many sellers would be leaving quite a bit on the table if they chose to sell this way. That said, I am curious to see if auctions will catch on, how they will work, and exactly who will be willing to participate.
