SVN Auction Services / Menish Auctions began 2015 strong with three January real estate auctions. Two of these auctions were online and one was onsite. The results may surprise you, as the two online auctions sold and the onsite auction did not meet the reserve. We are still negotiating with buyers for the onsite auction but at this time, it is a “no sale.”
This information ties perfectly into the purpose for this post which is to consider which approach to real estate auctions, onsite or online, works best? To begin, let’s examine the biggest success of the three which was the auction of a warehouse on 26th street near downtown in Louisville, KY. This auction was absolute, meaning it would sell to the highest bidder regardless of price. It was conducted online with our new bidding platform SVN’s Bid to Win and was a smashing success! The highest bid more than doubled our seller’s expectations. He is incredibly happy and we are thrilled for both the seller and the buyer.
So why was the online, absolute auction so successful? First, the value of the property fit the comfort level of interested bidders, meaning it wasn’t going to sell for hundreds of thousands or millions of dollars where the bidding pool is shallow. Plus, with a slow, but recovering economy, there is a growing desire for warehouse space in the area where this warehouse is located. Being absolute, the bidders knew that the property was guaranteed to sell. Also, we are happy to report that the bidders we talked with agreed that the bidding platform was easy to use and allowed them to concentrate on one thing – how high they were willing to bid. In this case, the online approach worked beautifully. It was so successful because we had a desirable property and we provided great due diligence creating a bidding pool of informed and motivated bidders.
What makes a property a good candidate for an online auction? It wasn’t long ago that auctioneers only put their “lower priced” or “tough to sell” properties online. We were even guilty of this years ago, but times have changed. Any property can be sold online. That’s right, any property. Now some are better suited, like raw land. We will be selling a property this spring that is perfect for a gas station or convenience store. Buyers should and likely will visit the location in advance of the auction, but they will bid online from the comfort of their home or office. But what about an office building? Well that was the other property we sold this January up in Waupun, Wisconsin. You might automatically think, with Wisconsin’s weather in January, that is why we went online, and that is only partially true. It was a property that quite frankly, shows well online, has a limited local buyer pool who would be interested and conducting it online allowed us to conduct the sale without being in Waupun. The buyer was the next door neighbors and they are thrilled to get it at their price. Again, the online platform worked beautifully for this property.
Why didn’t the third property, the one held onsite sell? We believe it was because of price. We had a “Published Reserve” of $725,000 but none of the bidders or attendees felt the property was worth the price due to the rough condition of the property, which had been vandalized. Even if we had auctioned this property online, we still don’t believe we would have reached the reserve.
Is there a way to determine which properties work best online vs. onsite? It really is a case by case decision. If the property looks great in pictures but really shines in person, then that may make a case for selling onsite. But we believe the real point here is that any property can be sold online. The buyers should have the opportunity to see the property, be able to do their due diligence and become comfortable with the property and the process. As long as they have their questions answered, they are ready to bid, no matter the method of bidding.
One last thought – residential real estate agents will tell you that more than 90% of real estate searches begin online. That number is probably true for commercial real estate as well. But we predict that in less than 10 years, 90% of all real estate transactions will start and finish online. It is the future of real estate and with our SVN’s Bid to Win platform, the future is here and available to you to use now.
SVN Auction Services / Menish Auction