Real estate auctions help establish market pricing quickly

In a volatile market, real estate auctions can be an excellent vehicle to help establish market pricing quickly. If you set up a Google Alert for "real estate auctions", you'll notice that a lot of builders and developers are turning to the auction method not necessarily to "liquidate" a project, but to find the market price quickly. There's nothing worse than having a large number of townhomes, condos and single family homes sitting on MLS at a price that's obviously not correct for the market. Discounting the price slightly over time in order to find the market can be costly in holding and lost opportunity costs. Holding a real estate auction can cut that time down to 30-45 days. The market data learned through the auction process can be invaluable to the seller and help them move inventory quickly at market price. This is especially important as the buyer pool decreases during the Fall and Winter seasons.

We recently held an onsite real estate auction of nine new townhomes that had languished on the market for 18 months because they were overpriced. How overpriced were they? The builder (and their lender) found out in less than 45 days through the auction process. The prices were adjusted accordingly and all but two units were sold out quickly while the summer buyer market in this price range was actively shopping.