The World Loves Auctions

On July 27, 2008, an article appeared in the St. Petersburg Times (http://www.tampabay.com/news/business/relaestate/article742807.ece) called, “Desperation Bid.”

In this article the reporter references several people who have tried to sell their homes conventionally without success, so they turned to eBay.

One of the homeowners is quoted as saying, “The exposure you get on eBay is priceless.”

This point is illustrated perfectly in my article, “The eBay Effect” http://www.sheldongood.com/news.php?listing=253.

I wrote the article in 2007 for the Certified Commercial Investment Member (CCIM) Institute in conjunction with one of our associates here at Sheldon Good & Company. We addressed how eBay’s popularity has improved the appetite for using auctions to sell all sorts of goods, and that the regular use of auctions to sell personal property and other like items has basically removed the taint of distress historically associated with real estate auctions.

In a nutshell, the world loves auctions.

It is therefore curious that the author of this article equates the use of auctions for real estate via eBay as an indicator of distress sales.

Simply put, if everything else listed on eBay is being sold for good reason without distress, why is real estate sold on eBay automatically assumed to be distressed?

The fact is, it isn’t.

Our firm has vast experience conducting real estate auctions for all sorts of properties – we’ve handled over 40,000 auctions since 1965 in over 100 different asset classes, often to sell commercial or industrial property, real estate that’s difficult to value or high end trophy residential property.

There are plenty of times when a seller opts to use an auction because their property is difficult to value, or to expand the market beyond a certain geography. An auction can help a property owner understand where the market lies for the property. The competitive nature of an auction is exciting because the buyer can compete directly with the other potential buyers, and the seller benefits because they obtain maximum value for their property.

As pointed out in our CCIM Magazine article, using eBay as a real estate auction tool isn’t really a binding process. It is merely a posting mechanism for sellers and buyers. No binding bids are received, it is simply an invitation to negotiate which may or may not produce results.

The reality is that the process eBay uses for real estate is not consistent with the auction process being used by companies like ours. There is a difference in quality of auctions. The sellers in the Tampa Bay area may not have had success with eBay simply because that wasn’t the right auction methodology or sales venue for their property. In 2007, according to the National Auctioneers Association, the amount of real estate sold at auction was $58.5 billion dollars – that’s an increase of over 25% since 2003.

Steve Good is Chairman and CEO of Sheldon Good & Company. He is an attorney, Accredited Auctioneer of Real Estate, licensed REALTOR in several states and author of a top-selling book; Churches, Jails and Gold Mines...Mega-Deals from a Real Estate Maverick (Kaplan, hardcover). The book features an afterword by Donald Trump.