When you think of an “Auction” in Asia you may picture a venue where people are buying luxurious paintings, jewelry, or even huge land purchases.
But wait, it’s a residential real estate auction, and the live event is open to bidding by anyone, regardless of their location, using an absolute real-time internet application open to a global audience.
Asia is now embracing auctions as an alternative method to sell and buy newly developed and under-construction residential property – and it can offer buyers the chance to get great savings over the original asking price, because at auction, “the buyers set the price.”
Auctions save time and money for all concerned and are popular all over the world to sell various assets. At a real estate auction, property can trade quickly, at fair prices, in a surprisingly open, honest, transparent, and hassle-free process.
Surprisingly, 30% of all residential sales in Australian cities are sold through auction.
In Singapore, according to JLL, it’s now being recognized as an alternative method to sell high-end units.
About World Auction Alliance:
World Auction Alliance (WAA) is headquartered in Hong Kong and their management pioneered real estate auctions in the United States; having transacted over 2,000 units and $1.1 billion in auction sales in its first 3 years.
They also elevated themselves to be one of the top three real estate auctioneers in the US.
In this article, Graham Kretchman explains why real estate auctions work, and about World Auction Alliance’s plan to further expand their unique process from the US to Asia.
Graham is the General Director of Asian Markets at WAA and has more than 15 years of experience in real estate.
Thanks for speaking to us Graham. You have held management positions in some of the world’s leading real estate companies in Asia and worked in Shanghai and Hong Kong. I would like to talk to you about your auctions in Asia, and how WAA is working with developers in Hong Kong and in the region to create a new sales marketplace.
Thank you Marcus for inviting me to speak to you about the auction system of marketing and sales. Well put. We are creating exactly that – a new sales marketplace for residential real estate that offers numerous advantages over the “traditional style” that is used now.
The World Auction Alliance’s accelerated marketing system for auctions is really what I like to say – the free market at its best. What I mean is that it brings willing buyers and sellers together in an open and transparent forum. It’s a proven option for selling real estate and it really works.
In fact, our founding company, US Auction, was the first in the world to do pre-completion real estate auctions. The public does not yet understand our marketing advantages at all!
Soon they will understand live auctions more, and even use our online app to sell to any willing buyer in the world. The timing couldn’t make us any more excited.
This is very interesting. It’s a new way to sell real estate that benefits both buyers and sellers. But why does it work?
It works because the auction creates a sense of urgency, and a fear of loss. What I mean is that the auction will take place at a specific date and time and the buyer is compelled to make a decision.
In other words, the properties that the buyer wants to perhaps buy, will be sold at a certain time, and they will have to participate and compete with others who also want to own the property. The open auction bidding process validates the buyers’ pricing decision and creates useful tension.
Our auction also establishes the fair market value of the property. The buyer sees and observes other bidders willing to pay equal to, or maybe more, than he wants to. By attending the auction, or watching the live bidding on our app, he validates his ideas of the property value.
WAA excels through our experience of running successful live auctions and offering an engaging software platform where bidders can watch and participate from anywhere in the world using our exclusive technology.
But how about the seller? How can it benefit them also?
Auctions work beautifully for the seller too, because the seller can set the terms and conditions of when the sale will take place, what the contract will look like, and ultimately establish an accurate market value.
They can set certain minimums or reserves so there’s very little risk. Our auctions create a win-win situation. It’s really the free market at its best.
So it’s like eBay on steroids?
Well, that’s a unique way to describe it. Yes, we incorporate software to allow bidders from China or anywhere in the world to participate, but the combination with our exciting live auction is the foundation of our work.
It’s more like a traditional auction house for art, like Christies or Sotheby’s on steroids now that I think of it. We run live auctions that are exciting, almost like a game show.
Historically, in the U.S. our team had 1000’s of people participating at the live event and now with our internet streaming technology, we offer assets to worldwide bidder participation!
So, if I understand this correctly, this must be good for the banks too?
Banks understand the auction process as it allows them, in some cases, to work with their clients and convert non-performing assets into sold or performing assets. Auctions can sell properties to serious buyers quickly, typically in 90 days, from initial developer, bank consultations and approvals.
Costs are also reduced by cutting down the amount of time required to carry all of the on-going project costs during the construction phase allowing the risk to be better managed.
Preferred banks can also be used for new auction buyer mortgages; however, we can discuss that some other time ok?
Okay, so how does it work for a buyer? How do I bid at your next auction?
On the projects we agree to work with, we help the sellers direct their advertising budgets in a manner that lets the buyers know that there is a potential to get a “deal” which could be a substantial discount from the original asking price.
Interested individuals can receive, in their preferred language, our project marketing material and auction process information by email or by visiting the property showroom. Our staff will answer all questions.
Also, at the showroom and online, if the buyers need financial assistance, they can work with our preferred banks and get them prequalified to purchase.
On auction day, at the auction site, registered buyers will be provided with bid cards and the latest property information. Online bidders will be verified and alerted to tune in to the event.
There will be a pre-auction seminar for all to watch, live or streaming, as well as last minute announcements, so it’s best for buyers to ready themselves early.
During the entire process, we encourage buyers to do their homework and research competing projects for price and physical comparisons so that they will be able to make informed decisions.
All auction day activities will be televised live on our mobile app, but only approved bidders can participate online and bid.
During the auction, all prospective bidders will know at all times what unit or pool is up for bid, who is bidding, and what the current bid price is. Bid assistants will also help you with your bid and follow along with the action. It’s not difficult to do.
You may not be the highest bidder on your first choice, so we recommend having second or third choices. It’s easy to get caught up in the excitement, so set a limit that is in line with your budget and stick to it.
Closing takes place in 30 to 45 days. This process is the same as conventional sales. It’s that easy!
Wow. So on the developer side again, how much does it cost to work with you to run an auction?
Listing a property for auction does not cost anything. In fact, it often makes better use of your marketing budget. We work with developers to optimize their existing marketing plans and communicate a new message that gets results and site visits now.
We can build a database of interested buyers more quickly than any other way I can think of. Developers own the leads for follow-up which leads to even more transactions.
In one auction in the United States, during our 30-day intensive marketing window where we included all types of marketing channels, we were able to get 14,233 site visits in that month.
These types of numbers speak for themselves and have continually yielded better use of the marketing budget to attract visitors for both auction and even post-auction sales. WAA only partners with developers that understand the entire process and we only earn a commission on the successful sales.
Which Asian countries are most interesting for real estate auctions at the moment and why?
WAA has our head office in Hong Kong, however, we work with and have agents in Singapore, Thailand, Vietnam as well as India. However, one of the best aspects of our auction team is that we operate like global management consultants. We are able to drop in and run an auction in 90 days.
In HK we are already planning an auction for after lunar New Year. Market forces in HK are favorable, including the impending vacancy tax on unsold units, rising interest rates, and economic uncertainty have seen developers cutting prices and buyers passing on paid reservation slots.
These reasons are why developers are looking to find new ways to stimulate sales. Those developers who want to move quickly will be rewarded.
In Vietnam, developers in luxury segment are increasingly relying on foreign purchasers to sell properties. Our online platform allows them to visit the property and then bid remotely at the time of the auction on the units they desire.
Last question: My friend is a broker; can he refer clients to your business?
Absolutely, we have never run an auction where we did not compensate licensed brokers that register with us and refer their clients.
They typically make the same percentage as they would if they had directed their client to a traditional sale and often with less work.
The entire process moves quickly and it may be that auctions just might be the opportunity and option your friend has been looking for. Have him speak to me.
Thank you Graham Kretchman, how can our readers get in touch with you?