Illinois has a long history of farm and equipment auctions to move no-longer-needed property. Technology has changed today’s real estate transactions; instead of buyers standing around an auctioneer, they now find and bid on commercial and residential properties through online auctions. From single property auctions to sales of 25 properties or more, online auctions move the high end, the low end and everything in between. According to MLS information from Midwest Real Estate Data (MRED), there are 471 real estate auctions going on right now in the Chicago metro area.
The benefits of online auctions are many. “The auction process speeds up the transaction process,” said Diana Peterson, president of AuctionWorks in a recent telephone interview. “It provides a sense of urgency that is not present in the traditional real estate market.” Online auctions also avoid the pitfalls of traditional sales that often fall through due to financing contingencies. Auction companies always require a non-refundable deposit from every winning bidder (as much as 5-10%) which creates a greater degree of certainty that the sale will go through.
While an auction sale on average takes 30-45 days to complete due to marketing time and necessary due diligence, the online auction itself may only last 1-3 days, creating an urgency that drives these sales. Each property is generally available a handful of days with limited time frames for open houses/on-site inspections. When all interested buyers are viewing the property at the same time, they realize they need to act right away. With some auction companies, like Auctionworks, pre-auction bids are encouraged and can be effortlessly made via e-mail.
According to Peterson every company is different; however AuctionWorks encourages pre-auction bids and most of their sales take place either during the pre-auction bidding period or after the online auction ends, when some buyers who learned about the auction after the fact will contact the company to make an offer.
Look for the number of online real estate auctions to increase, as buyers and sellers become more comfortable with the technology and the auction process.
Nancy Mathieson is Contributing Editor at WirePoints Illinois News