Our Chat with Harcourts Auctions CEO, Ben Brady
May 15, 2020
Chances are, when you think of real estate auctions, the first thing that comes to mind is foreclosure sales, bank-owned properties, or something along those lines. While that’s certainly their most common use, auctions do provide an interesting platform with unique advantages for selling mid to luxury level real estate as well. To learn more about their viability as a platform for premium real estate, we met with Ben Brady (CEO) and Shannon Mesritz (Regional Auction Director), of Harcourts Auctions, a New Zealand based company who run auctions all across the west coast.
A key point that Harcourts makes about auctions, is that they force buyers to shift their focus from price to value. In a traditional sale, buyers tend to fixate on the list price, and adjust their offer to be whatever amount below or above that price they think the market will bear. For example, if sales in a particular market are averaging about $20,000 over the list price, a buyer might tether their offer to that mark, thinking they just have to be around that number to have a good shot at being the winning offer. In the auction format, a buyer doesn’t have any of that information to base their bid on. Instead, they take into account all of the pros and cons of a home, and make an assessment of how much they are willing to pay, not how much the market tells them they should pay. Of course, that doesn’t necessarily mean an auction will get you a higher price than a traditional listing, but for sellers who are confident in the value of their home, it offers a clever way to force a buyer’s hand.
So what happens if the auction format backfires, and you don’t even get a bid that meets the minimum price you were hoping to get? Are you then forced to sell? No, at least with Harcourts Auctions, if bidding fails to meet your minimum price, you are under no obligation to sell. You are also free to accept any offer prior to auction day.
Another advantage to selling at auction is that buyers are required to do their due diligence ahead of auction day, which means your contract will always be non-contingent. All offers are made on an “as-is” basis, so you never have to worry about negotiating on terms. Being allowed to set the auction date also gives you greater control of when your home ultimately sells.
Harcourts Auctions boasts a 91.6% success rate, meaning only 8.4% of homes have failed to sell after auction out of the 1,300+ homes they have listed so far across California, Nevada, Oregon, Washington, Hawaii and B.C Canada. But in the event your home fails to sell, you still have the added benefit of knowing how much people were willing to spend. And a list price was never advertised, so you can list at the price you want later on without worrying about any adverse affects the auction had on your home’s perceived value.
There are certainly some compelling points to be made about the value of the auction format as a platform for selling high high value real estate. It will be interesting to monitor how Harcourts fares here in the Bay Area, where there isn’t as much of a precedent for the platform as in some other markets. They seem to do well in Southern California, and have had some success on a smaller scale so far here in the Bay Area. Perhaps their growth in the Bay Area will spread awareness of the auction format as a viable option for sellers.
If you’d like more information on the auction format, and whether it could be a viable option for your own selling (or buying) aspirations, give us a call. We’d be happy to discuss your situation with you, and offer some insight. (650) 363-2808
You can visit Harcourts Auctions website at: www.HarcourtsAuctions.com
You can also click the following link to view a recording of their most recent auction in Orange County, in which 9 of 12 properties sold despite the fact that it occurred during the shelter-in-place: Recent Auction Video