A realtor and auctioneer explains how open auctions solve a major problem in real estate: buyers in multiple-offer situations don't know what other bids are, so they overpay and distrust the process. Public auctions show all bids, letting buyers see actual competition and bid with confidence.
Being here at the auction convention, I'm talking to a lot of the agents here who are REALTOR members. They're also licensed auctioneers and they do real estate in a lot of places. So when you look at the situation here of hidden information in this bucket and this bucket, and how do you get access to it? It begins to look like auction might be the best possible outcome. For a lot of reasons. And here's why I love auction in real estate. As a buyer, you know what the bids are. You do have some transparency. I mean, unless it's a sealed bid auction, that's a whole separate thing. But on a general auction, you know what the bids are. That's been a frustration for every one of my buyers who's ever bought something in multiple offers. We say hey to the agent, we're bringing you an offer. She says, hey, we have another offer coming in. I have to trust that she's telling me the truth. Now I know that many of the agents that I've known for a long time, they could never lie, but if it's somebody I don't know, well, I don't know what I don't know. And then we send in our offer and they call for best and final. And so we make our best and final run. I don't know what the other side's doing. So we're always bidding maybe against ourselves or bidding against the big, big question mark. An auction is transparent.
