In real estate, it's "location, location auction"
by RaeAnne Marsh

"Going once. Going twice. Sold!"

Yes, that's the new sound of real estate in the Phoenix area. Not a new concept in American lore at all, as the auction block for residential property resonates with "foreclosure," but also with the mystique of $50 million celebrity mansions in Beverly Hills. And it arrives in Phoenix this month.

National Real Estate Auction Corporation will hold its first auction March 24. Representing properties in a wide-flung area that this time extends from Apache Junction to Litchfield Park, and from Arizona City to Cave Creek, Carefree and Surprise, NREAC brings them all together at the Phoenix Convention Center.

Not all the activity takes place at the auction. In fact, not all properties are held until the actual auction to sell. But the auction date represents an ending date for sellers, a date by which they can be confident the sometimes slow sales process will be over.

Long prior to the auction event, auction properties are marketed in radio and TV spots as well as in newspaper ads. There's the de rigueur virtual tour. And the weekend preceding the auction, an open house is held at every property.

"We want everybody to be able to tour every property, and come to the Convention Center and make an informed bid," says Jay Taylor, NREAC's director of marketing.

If all that advance marketing results in a sale of the property prior to the auction, that's just fine with NREAC. "Our focus is selling the property," says Taylor, "The difference between us and regular real estate is there is an end to the process. If we have not sold the property prior to the auction, our hope is we will have plenty of people at the auction."

The romance of the word "auction" is what seems to make the difference.

"It adds to the attention," Taylor observes, noting the differing impact between "Open House" and "Public Auction Open House."

Presenting themselves as one more marketing tool for the industry, NREAC works with a property's listing agent. There's no minimum or maximum value limiting what properties can be involved. Listings in the upcoming auction range as broadly in price as they do in geographic location: from a $130,000 condo to a $3.2 million house. The higher-priced homes naturally attract attention. The advantage to the lower-priced ones is they get to be in the same ad as the multi-million-dollar ones, explains Taylor.

For the buyer at the auction, one advantage is knowing the status of their bid on a house. As opposed to the bid, counter-bid process and the inability to know where their bid stands in respect to others the seller may be receiving, they will know immediately whether they have been accepted as the lucky buyers. Depending, of course, on the order in which the properties are brought up, if a buyer has a price range in mind and isn't really tied to a specific geographic location, and the first choice went to another bidder, the buyer can move on to bid on another.

The houses are offered as is, with a 30-day close of escrow. Sales accept no contingencies. And there's a fail-safe for the seller: "The seller's reserve must be met," states Taylor.

After all, sellers have mortgages to meet, he explains, and NREAC's reserve price strategy is their protection. That price is not advertised, and if the bidding exceeds it by $3 million or just $1, the auctioneer says, "Sold."

It's the nature of an auction that a buyer may get "a good deal" on a house price-or the buyer may end up paying more.

"There's a certain amount of emotion to it all," Taylor acknowledges. "People get into the competitive spirit, and bid against each other-and want to win."

At an auction in Florida, a home sold for more than market value. "The woman [buyer] was not disappointed; she got what she wanted," relates Taylor, adding an "above market" sale does not happen often.

One additional cost, of which the bidders at the auction itself are made aware up front, is the "buyer's premium," figured at a percentage of the selling price levied by the auction house.

While the real estate auction is not a new concept, the multiple listings aspect of it is. NREAC principals John McCann and Lisa Galano picked up on the idea after seeing it in Florida, bringing the concept to Scottsdale late last year.

An additional advantage NREAC offers a seller is diluting the cost of an auctioneer, who often charges $100,000 up front, according to Taylor. NREAC offers various marketing plans at various prices, but auction is part of all of them. Planning to optimize the auction experience at 200 homes per auction, eventually, NREAC projects 125 houses will be part of this first Phoenix auction.

Properties may be viewed on NREAC's Web site, azpropertybid.com, and the company can be reached at (480) 348-2243.