BLOG VIEW: The new generation of technology-empowered, self-directed home buyers is reshaping today's real estate market. Armed with laptops, tablets and mobile phones, these individuals have great expectations for a much more digital process of buying and selling homes. And though this is playing out in essentially every corner of residential real estate, these buyers are becoming increasingly prevalent in online property auctions.
There are two major reasons: The format is well-suited to self-directed buyers, and stronger real estate markets are compelling buyers to look for bargains in the auction space.
These dynamics present great opportunities for home sellers. But, in order to capitalize on these opportunities, both sellers and auction markets must evolve to meet new customers' needs.Â
The Consumerization Of Home Auctions
There has been much speculation in recent years on whether the growing pool of everyday home buyers who have been going online for better ways to buy and sell properties would eventually spill over into the online property auction market.
In recent months, we've seen the answer: The auction market, once considered an arena where experienced professionals quickly bought and sold from inventories of properties to rehab and then rent or sell, appears to be a new destination for cost-conscious home buyers and ‘fix and flippers.’ These consumers are excited by the idea of outbidding competition to purchase a home, and they gravitate to the idea of doing more by themselves using whatever device they want.
We know consumers are taking real estate purchases online, where dynamic maps and interactive valuation tools are providing an educational, transparent and user-friendly way to search and bid on homes. The auction market is becoming increasingly demystified. Bidders are empowered when entering an auction knowing as much as possible about the region, and thanks to mobile devices, the auction process has evolved into a more streamlined process for anyone, from anywhere.
There is also greater awareness today that auction properties aren't necessarily trashed homes requiring a complete rehab. Following the financial crisis, banks found it advantageous to keep non-paying borrowers in their homes to make sure they were maintained, which has greatly changed the market.Â
The consumerization of home auctions has picked up significant momentum this year. For example, at Hubzu, we've seen an unprecedented 25% increase in daily bidding activity and an 84% spike in the ‘sale pending contract’ status of bids made from mobile devices, including 55% from tablets.
That speaks to a hot auction market fueled by buyers' intent on using the latest in consumer tech. We're seeing properties purchased and moved off the Hubzu platform in an average of only 53 days (a median of 32 days). And, we're seeing activity come from a new wave of shoppers, with unique visitors climbing by 22% in the second quarter compared with the second quarter of 2014.Â
Meeting The Consumer At The Intersection Of Supply And Demand
This new and growing interest in auctions highlights the importance of institutional sellers – the primary suppliers of auction inventory – in taking a consumer-friendly approach and considering a fresh look at the way properties are priced and marketed.
Success may seem to be a simple proposition in today's paradigm of rising auction property demand, but sellers must be conscientious about the shifting expectations of buyers. Institutions know well that they can price properties low to move them fast – which is going to attract cost-conscious consumers. This potential for a bargain is what is helping to attract consumers to auctions in the first place. However, making sure that the selling process is consumer-friendly is also critical.
Given the move to mobile, marketing properties in a way that is optimized for mobile browsing is essential. Because more content and information about properties are readily available, consumers will scrutinize a property more closely. For institutions that don't want to have properties linger on their books, there's a greater need to present well-staged properties.
This means using the same kinds of detailed photos and descriptions that consumers have become accustomed to seeing on non-auction listings. To capitalize on the fast-moving consumer who needs to secure financing quickly if he wins an auction, institutional sellers also need to explore new lending avenues. Unlike larger buyers who might come to the bidding process with financing or cash already in place, the consumers that are now dabbling in auctions are more likely to need a financing option – preferably one that can allow them to wrap up an entire transaction from the comfort of their living room.Â
The online home auction market continues to be very strong, but the characteristics of a successful seller will continue to shift as buyers demand more digital and consumer-friendly shopping experiences. We're witnessing this change first hand and are amazed at how quickly it has come about. Fortunately, online auction markets are adaptable, and with a concerted effort, institutional sellers can easily meet the needs of today's buyers.
Steve Udelson is president of Altisource online real estate. He oversees the Owners.com marketplace, where self-directed consumers use and pay for only the services they need, and the Hubzu online real estate auction marketplace, where buyers, sellers and their agents list, buy and market properties.
(Do you have an opinion to share with MortgageOrb? Get in touch! Send an email to email@example.com.)