By Braden McCurdy

A new trend is sweeping the nation! Real estate auctions are a fast and easy way of transferring property and the process is growing at record rates. The auction industry is booming! According to a study by Morpace International, in conjunction with the National Auctioneers Association, the industry has grown from $195.6 billion in 2002 to just over $257 billion in 2006. Real estate at auction is the fastest growing segment of the industry and 92% of consumers hold a favorable view of the auction profession. Across the world, more and more homes, commercial buildings, and land are trading across the auction block and the demand for this selling method appears to only get stronger.

Buying or selling at auction is truly a win- win situation. A seller knows the maximum was obtained and a buyer knows they purchased the property within one bid of what another consumer was willing to pay. This eliminates the uncertainly of whether a buyer purchased or a seller sold at true market value. Auctions are also timely and convenient. Auctions eliminate the negative haggling approach that can often take days or weeks in a conventional real estate transaction. Instead, they are fun, upbeat and positive and the buyers and sellers know within minutes whether they bought it or sold it. Sellers are mostly attracted to auctions because auctions produce cash and as-is terms with no contingencies. Buyers are attracted with the hope of making good prudent purchases in a timely manner. Oftentimes, closings can be conducted within days following the auction which accelerates the purchasing process. Quick closings can be especially attractive to buyers who are utilizing 1031 tax exchanges or have pressures for a quick move as a result of a recent sale.

Buyers always ask us what they need to know before walking into an auction, so here are some tips. As a buyer, your objective should be to gather as much information about the property as possible. The only unknown is price and that’s the fun part. Auction companies typically accommodate buyers for property inspections any time up to the auction date and usually have the property open prior to the auction. By obtaining your inspections prior to bidding, you know how to adjust what you will bid for any defects in the property. Buyers can also purchase home warranties. Many times the auction company will have information on home warranty programs. Another information piece that a buyer should try and obtain is a property disclosure form completed by the seller which provides a history of the property during the seller’s ownership. Many times auctioneers will prepare a property information packet for interested buyers that will usually include a completed seller’s property disclosure. If a buyer is obtaining financing, it’s beneficial to have pre- approval prior to the auction since the contract doesn’t have a contingency for financing.

Another frequent question we get is in regard to REALTORS®. Many auction companies have programs to cooperate with other agents or brokers. There are several types of programs and it’s important to check with the auction company. There are programs to allow your agent’s involvement no matter if you’re buying or selling. REALTORS® are recognizing the benefits of buying and selling properties at auction and many are using auctioneers’ services as another tool in their briefcase.

Residential real estate auctions grew 39.2% in 2006 according to Morpace and the growth is certainly noticed in the Wichita marketplace. The growth of commercial properties in 2006 was 27.4% and land came in at 33%. These are significant growth figures that clearly display that consumers like auctions and are supporting them everyday.