Condominium Sellers Embrace Auctions

While auctions have long been touted as a good way for buyers to take advantage of market inefficiencies and desperation selling, sellers are more and more often utilizing auctions as a way to move inventory quickly without the expense or hassle of dealing with brokers.

The market has firmed - that is to say, stabilized - in much of the country, and people looking to live in or invest in property are turning out in substantial numbers at condo real estate auctions and have, consequently, put a floor into many markets' prices. But auctions, historically reserved for liquidations of developers' or banks' foreclosure portfolios, are gaining traction with sellers.

While open market sales with brokers will generally allow sellers to realize higher sale prices in a softer market, in firmer markets, the difference between a seller will get at auction and what a seller will get after a commission sale through a broker is sometimes greater, but more often less enough that the difference is negligible for the peace of mind that comes with having disposed of an unwanted or unaffordable property.

Auctions are run with far lower commissions, and in firmer markets, demand is strong enough among an active investment community that there is actually rational pricing and decent liquidity for housing inventory.

This liquidity and pricing rationality is most frequently found at condo real estate auctions, since there seems to be a consensus that new construction will outperform existing homes in any real estate rebound (not to mention that it is smarter to buy new if it costs the same as buying old because of lower maintenance costs, etc), and that urban areas will turn before suburban areas because demographic and economic trends do not favor as rapid a recovery in suburbia.

While the vast majority of homes sold at auction are part of liquidation, retail sellers looking to sell property quickly are frequently surprised by how well they are able to do at auction, particularly if their property is in a desirable building in a desirable urban market like Chicago.

While there are no guarantees in the auction process, reserve prices protect against any outrageous low-balling, and the frequency of auctions and the consistency of pricing has even given way to a new breed of speculators who flip condos for tiny profit margins at various auctions. For those with a bit of a stomach for risk and a burning desire to sell a condominium quickly, an auction or online auction is worth considering.