From the May 13, 2005 print edition
Real estate auctions move out of shadows
Wendy Culverwell
Business Journal staff writer
The house sold in a matter of moments and within half an hour, the contracts were signed.
"I thought, ’Hey, that’s the way to do it,’" said Stuart, a real estate agent who subsequently attended auctioneers school and is now a licensed auctioneer.
His firm, Stuart Realty Group, Inc. in Canby, sells both through traditional multiple listing service and through the auction method.
In the auction world, real estate is the fastest-growing segment of the market and accounts for roughly a quarter of the $200-billion-plus auction industry.
Stuart gives at least partial credit to the online auction service EBay for increasing the hip factor of auctions, at least in
Auctions were once the haunt of bargain-seekers in search of underpriced gems at seized vehicle auctions and foreclosure proceedings, he said. Buyers went to auctions with the expectation they would pay pennies on the dollar for their finds.
EBay, which brought auctions to the online masses, changed that perception.
"They’re realizing you’re not just giving stuff away," Stuart said.
Stuart said any property is a good candidate for auction.
“If you’re the seller, you can also broadcast to a wider audience and bring in more buyers and competition, which breeds higher prices."
Modern-day auctioneers, he said, are savvy marketers who know the best prices are the result of casting a wide net.
Still, some properties are better-suited to auctions than others, he said.
Homes in hot neighborhoods and affluent neighborhoods are good candidates. Showcase homes, those being sold by trusts or estates, and high-profile properties are also likely to do well.
Stuart estimates he sells half the properties he handles by auction. A licensed auctioneer, he calls his own programs and specializes in Portland-area properties, though he has worked across the state. The numbers will just keep growing, he said.
In the
Land and agricultural real estate was the fastest-growing segment of the market that year, growing by 12.9 percent to $19 billion in gross revenue. Residential real estate accounted for $11.5 billion in gross revenue, a 12.6 percent increase, according to the auctioneers association.
Commercial and industrial real estate sold at auction generated $11.8 billion in gross revenue, a 6.6 percent increase.
In comparison, the category covering art, antiques and collectibles remained flat at $11.4 billion in revenue. With $79 billion in sales, auto auctions remain the giant of the industry and represent more than 41 percent of all auction revenue. But it’s a flat segment with almost no year-to-year growth, according to the auctioneers group.
Realty Marketing/Northwest has specialized in real estate auctions for more than 20 years. "Our business is busier now than ever," said John Rosenthal, president of the Portland-based company, which has racked up more than $500 million selling timberland, agricultural land, homes, vacant land, surplus office buildings and an array of other real estate.
Rosenthal said the biggest change he’s seen is in the number of properties put up for auction before being listed any other way.
It used to be that 80 percent of properties sold by auction were first listed by more conventional methods. That’s turned completely. Now, 80 percent of his new business was not previously listed.
"Sellers recognized they do get top dollar," Rosenthal said.
Case in point: Last year, Realty Marketing/Northwest handled the sale of six homes in Southeast Portland that had been donated to Willamette University. All six were fixer-uppers. On one, the company rejected a pre-auction offer of $120,000, which was $10,000 above its $110,000 reserve price. At auction, it sold for $170,000.
Indeed, all six sold for more than their reserve prices and the university earned $250,000 more than expected.
Managing expectations is a key. Rosenthal said he passed on a recent home in
"Not everything makes sense," he said.
Saturday, at the Sheraton Portland Airport Hotel, Rosenthal will auction 15 properties, including developable property in
"You’ll see 15 properties sold in probably 55 minutes," he said. Traditional real estate brokers are watching the auction market, but aren’t worried it will eclipse the multiple listing service, which exposes residential real estate to thousands of potential buyers at the click of a mouse.
"I know it’s popular in other parts of the country," said Brian Allen, president of Windermere/Cronin & Caplan Realty Group, Inc., which locally handled about 8,500 residential sales in 2003."Part of the reason is, our market has been so hot people are not seeking alternatives to selling their property," he said. With sellers often receiving multiple offers on properties listed through the Realtors Multiple Listing Service, there’s already an auction-like atmosphere in the market, he said.
Allen agreed that EBay has changed the public perception of auctions from a venue for hard-to-sell properties and bargain hunters, to an outlet for certain listings.
An auction can be a good way to sell unique properties or those with limited local appeal. He gave the example of a celebrity home in
Contact Wendy Culverwell at wculverwell@bizjournals.com or 503-219-3415.
