Selling Homes via Auction
Most people wouldn’t think to put their homes up for auction when selling, but this article argues that using an auction format can save time and money. Nicole Messier is the VP-Marketing for a company that does real estate auctions, and said that online auctions for homes have been increasing by 25% each year, and people are starting to use them just like any other real estate listing.
Our textbook says that auctions are generally used when sellers do not have a good sense of buyers’ true values for what they are selling. The Forbes article agrees on this, saying auctions “can be helpful in a downturn to sell a house quickly at true market value.” However, the article also asserts that auctions increase the chances that buyers will pay more than they wanted to, due to the competitive nature of auctions. Although the article didn’t specify what type of auctions are typically used, we saw in class that in most cases, people will not bid above their true value, so in general will not end up paying more than they wanted to pay.