Sealed-Price Auctions in Real Estate
Sealed-bid auctions are becoming more popular all over the country. These are auctions where the buyers write down how much money they are willing to spend on a product and do not see how much other buyers are offering for the same object. The buyers offer their true value for the product. There are two specific types of sealed-bid auctions. There is a first price sealed-bid auction and a second price sealed-bid auction. A first price sealed-bid auction is where if one buyer bids the highest amount, he or she ends up paying his or her true value. A second price-sealed auction is where if one buyer bids the highest amount he or she pays the amount of the second highest bidder’s value. These sealed-price auctions have been very successful when attempting to sell objects, which has caused professional brokers to use this technique to sell multi-million dollar houses and apartments.
Real estate brokers are not selling properties the way they used to be selling them. Tons of brokers are shifting their methods and are using sealed-bid auctions to help sell homes that are less popular among the buyers. The economy has been plummeting which has caused a drop in the demand for property. Brokers are having trouble using common selling techniques to attract buyers and believe that the sealed-bid auctions can help jump-start an interest on a listing. Sealed-price auctions were actually used as technique to sell properties when the economy was booming and it proved to be extremely successful. Due to this, brokers are attempted to bring it back to attract buyers. It turns out that their strategy has been working.
Once brokers brought back sealed-price bidding, more and more properties began to sell. Richard Orenstein, an executive vice president at Halstead Property conducted a sealed-bid auction for a three-bedroom penthouse with a private elevator in New York City. Wendy Maitland, a senior vice president at Brown Harris Stevens also accepted seal bids, for a 2,200 square-foot two-bedroom, also in New York City at 115 Central Park West. Obviously the sealed-price auctions have been successful in providing a spark to the falling real estate market.
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