What You Need to Know
The current commercial real estate market is challenging investors to find alternative paths to buying and selling properties. Auction services offer owners an effective way to maximize profit in an accelerated timeframe while expanding their reach to buyers. For investors looking to buy, auction services eliminate the exhausting negotiation process and help ensure the property is being purchased at a fair market value.
Understanding the Benefits of Auction Services
Over the past three years, online auction platforms like Ten-X have seen a shift in listing revenue, from 80 percent being from distressed property listings to a majority shift of 70 percent private client revenue and only 30 percent distressed asset revenue. This significant change is attributed to investors understanding the auction process and its benefits more, increasing its popularity among buyers and sellers who want a quick transaction timeline and a higher probability of closing.
Using auction services, sellers have approximately a 95 percent chance of closing with a winning bidder, with a non-refundable 10 percent deposit and a 30-day window to close. Sellers avoid the lengthy process and secure a vetted, qualified buyer from the start by selling at an auction. Buyers receive transparency in the bidding process and an expedited closing process. Auction platforms typically attract owners and smaller, non-institutional buyers looking to deal in the sub-$15 million price range. However, institutional sellers also participate in auction deals and there has been an uptick in larger deals coming to the online market.
The number of offers can vary based on the asset, but two to three buyers are usually the main drivers of the selling price in the bidding process. Overall, as high-interest rates continue to hinder lending, buyers are turning to auctions to vet different properties within their price range and purchase assets for true market value.
As real estate auctions gain popularity and online platforms gain a larger user base, evolving trends have emerged.
Unveiling the Latest Auction Services Trends
Real estate auctions’ rapid growth encourages platforms to invest in the technology behind the service and define their services with a digitally-focused approach.
Online Auction Events
In recent years, online auctions have become the preferred platform for investors, who can view assets across the country from anywhere at any time. Online auctions offer convenience and accessibility while attracting a larger pool of potential buyers. Hybrid auctions are also increasing in popularity, meaning there is a live event happening while also allowing remote participants online.
Blockchain Technology
Blockchain technology is a digital database that stores ownership records of assets in a network. Auction services use blockchain technology to bring transparency, security, and heightened efficiency to the transaction process. Although not widely used currently, in the future, auction platforms can utilize the digital database to automate contract execution, facilitate transactions, and provide secure auction data. Investors often believe auctions that use blockchain technology are more trustworthy and find the process more streamlined.
Supplemental Marketing
To attract more investors, auction services are implementing more targeted and data-driven marketing strategies. Auctioneers can curate tailored marketing packages to target specific audiences by analyzing investor preferences, online behavior, and demographics. Complementary marketing maximizes buyer interest and increases the likelihood of success for sellers.
Live Streaming and Virtual Reality
Implementing technology from start to finish is a success for auctions. Some services offer live event streaming to increase viewership and bidders in real time. In addition, as virtual reality becomes more mainstream, auction platforms can use it to provide virtual tours, encouraging buyers to visit the property without being there physically. Virtual technology allows platforms to increase auction participants’ engagement significantly.
These evolving trends in real estate auctions reflect the industry’s continuous efforts to adapt and cater to changing investor preferences and expand the industry’s reach. As the market continues to be affected by high-interest rates and inflation, auction services will increase in popularity, integrating simplicity and ease into the commercial real estate transaction process.
