Auctions Win More Business in Real Estate Market
When existing home sales numbers come out on Thursday, they are expected to show the housing boom continuing. Sales of homes, including sales to investors, have been contributing to one of the strongest housing markets on record. One way some buyers are snapping up properties is at auction. Auctions have yet to take off in the United States the way they have in some other countries, like Australia.
Auctions still make up a tiny fraction of the $1.6 trillion U.S. real estate market, but their use is growing. The National Auctioneers Association, an industry trade group, estimates sales revenues from residential real estate auctions in the U.S. last year grew 14 percent from 2003.
Unlike a traditional real estate sale where the seller pays a real estate agent a commission, at an auction its the buyer who pays a premium.
For sellers the benefits of the auction are pretty obvious. But even many buyers, despite the premium, say an auction is worth it because it allows them to gain title quickly. All sales must close within 30 days. That can be an advantage in a hot housing markets like the Washington, D.C.
The downside is that an undisciplined buyer can overpay. Having a plan is the key to buying at auction. Bidders must be willing to walk away if the price isn't right.
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