Real Estate Auctions Growing in Popularity

Long the standard in other countries, real estate auctions are quickly gaining in popularity in the United States. Recently, the process is also losing its stigma of being an option of last resort, associated only with distressed properties and foreclosures, according to real-estate professionals. From residential real estate to commercial real estate and land acreage, buyers and sellers alike are finding that auctions set the fair market price for real estate. In fact, real estate is the fastest growing auction category today. According to the National Auctioneers Association, more than $16 billion of residential real estate was sold by auction in 2006, an increase of 12.5% over the previous year. The gains are a continuation of what has been seen in previous years, even during the real-estate boom. The group said that $11.5 billion in residential real-estate was sold at auction in 2003; the segment saw a 39.2% increase between 2003 and 2006.

But as housing markets cool, the idea is becoming more interesting to some sellers who need to move. And it's also intriguing to price-conscious buyers who are able to line up financing in advance and commit to a contract that often doesn't allow for contingencies.

An auction is one way to arrive at the true value of the home at that moment in time, which is especially appealing to buyers who want to make sure they're paying a fair price as market conditions are shifting, said Tommy Williams, chairman of Williams & Williams, an auction company based in Tulsa, Okla., and the current president of the National Auctioneers Association.

Williams thinks that as more people get exposed to this method of doing business, even more home sales will be conducted by auction. People seem to especially like the transparency of the bidding process because all participants are aware of what others are offering for the home and all must abide by the same terms of sale.

If you are considering buying or selling real estate at auction, a real estate professional or auctioneer can offer valuable advice. Auctionservices.com has created an Auction Community that is free and open to the public. Members include real estate professionals and auctioneers who can answer your questions.