While not all online auctions are created equal, two key things to look for are auction platforms that have built-in technology known as soft close or dynamic endings and high sell-through rates.
A soft close or dynamic ending is when a bid is placed in the final minutes of the bid increment (the minimum dollar amount needed to place the next bid) and is lowered with only a few minutes remaining in the auction. Since the reserve price has already been met, additional time automatically is added to the clock and the auction is extended.
This process continues until there are no more bids in the last few minutes or seconds of the auction, at which point the highest bid submitted before the clock runs out wins. This auction feature is highly valuable to buyers and sellers since all bids are fully disclosed. Additionally, with the extended timer, they know where they stack up against the competition and always have the chance to bid before the auction closes.
Likewise, sellers have confidence that they are achieving full market pricing since the dynamic close feature captures the true competitive nature of an auction and helps eliminate the risk that they are leaving money on the table.
Measuring the effectiveness of an auction site comes with its sell-through or trade rate. If an asset is listed on a platform with an 80% sell-through rate, that means your asset has an 80% chance of selling.
Strong sell-through or trade rates are indicative of how auction specialists determine the value of an asset and whether it is appropriate for auction. Crafting a successful auction event for an asset requires setting precise pricing expectations that leverage qualitative analysis, market dynamics, and demand analysis for the subject asset. Building and presenting a comprehensive assessment that is agreeable to the seller is key to achieving a successful auction sale.
Auction platforms that do not conduct a thorough asset assessment and valuation with seller approval typically rank lower in sell-through rates. Choosing an auction platform with the highest current and historical sell-through rate is a key differentiator in the success of an auction event.
When exploring auction platforms, it’s important to know how platforms collaborate with brokers. Some auction platforms will not work with third-party brokers in their sale assignments and even if they claim to do so, the broker’s role and fees are significantly marginalized.
These sites either have internal sale advisors that run the sale process or operate in a do-it-yourself (DIY) model, where sellers run their own sale process. In the case of sale advisors, outside brokers who introduce that platform to the opportunities are paid marginal finder’s fees or small co-broke fees. With DIY sites, brokers are completely sidelined since they encourage sellers to list, market, and sell their properties without a third party and often promote the fact that there are no broker fees or agendas.
In both cases, it is understandable why many brokers are reluctant to turn to these auction sites out of concern that they will be left out of a sale completely or paid a small intro fee for bringing a deal to an internal advisor who then runs the sale.
It’s important to find the right platform that collaborates with brokers and where brokers have a critical role in the sale process applying their CRE knowledge and tapping into their local networks and professional connections. Rather than compete with brokers, the right platform should serve as a resource for brokers supplying valuation support and the technology to run a successful online auction.
We’ve partnered with RI Marketplace, the industry-leading commercial real estate online sales platform that offers traditional listings and auction events.
When you add your properties to Buildout, you can choose to have listings automatically syndicated to the RI Marketplace network. Here, a team of experts will assess your property to determine whether it’s a good fit for an auction. And, if it is, they’ll immediately reach out to see if you and your client are interested in pursuing an auction.
Unlike other auction sites, RI Marketplace is highly selective about which properties they allow on their auctions. They’re also selective about who they allow into the bidding process. Their network of more than 100,000 buyers is pre-vetted, has a proven track record of investing in assets via auction, and is highly active on the RI Marketplace website.
And while some sites leave brokers out of the sale, RI Marketplace supports you at each stage of the process to drive success and maximize returns and even offers brokers a fee when a property closes.
If you aren’t leveraging CRE auctions, you could miss out on huge returns for your clients. Fortunately, by using Buildout to syndicate your listings to RI Marketplace, you can take advantage of this opportunity fast.
Want to learn more about how you can tap into CRE auctions with Buildout? Request a demo today.