As the Number of Real Estate Auctions Rises, So Does the Competition

April 27th, 2011 by melissa

While the real estate market remains sluggish and unpredictable, auctions continue to be a viable option for distressed property owners and those looking to sell real estate at auction fast. The rising popularity of real estate auctions is also raising the competition – it’s not just an investor’s domain anymore.

The 2011 Washington D.C. Real Estate GuideMany everyday buyers, such as those looking to purchase their first home, are shopping the auction circuit. With foreclosures still at a record high, scores of houses are being placed on the auction block that can be acquired at significantly lower prices than on the traditional real estate market. This is presenting seasoned real estate investors with unwanted competition. Even in the few states that are actually turning a profit in the housing market, such as Washington D.C., competition at auctions is pretty stiff. “When it comes to auctions for real estate in Washington D.C., I’m seeing more and more that the winning bids are coming from mainstream buyers, which makes the numbers for investment buyers very difficult if not impossible to make work,” says Eldad Moraru of Long and Foster Realtors and author of The 2011 Washington D.C. Real Estate Guide.  “In many cases, the auction as a vehicle for acquiring investment properties in the Washington D.C. real estate market is becoming less feasible.”

Let’s not forget about the competition among investors themselves. Reuters recently reported, “Investors are flocking to home foreclosure sales in California and other states where banks have rescheduled auctions postponed last year to fix loan servicing flaws.” Due to last year’s bungling of the foreclosure process, auctions that were cancelled in 2010 are now back in action this year, bringing real estate investors out in droves. Reuters states, “Investors are lining up as banks restart foreclosures from moratoriums imposed last year to review faulty processes, such as “robo-signing” of court affidavits or other document issues… For those properties priced attractively to investors, competition is fierce.”

Ergo, this competitive environment is making more property owners choose the real estate auction as their mode of sale – the idea being the higher the competition, the higher the sale price can be. As Slyman Real Estate & Auction puts it, “…competition stimulates prices as no other marketing method can. Sellers of real estate are embracing the auction method of marketing as never before… Today, the competitive bidding process is being used to sell everything from homes to farmland as well as industrial plants to apartment complexes.” As it stands now, it looks like the competition as well as the inventory are both only going to grow in the real estate auction market for an indefinite amount of time.

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