SB Equities

I’ve always been a fan of auctions.  Maybe its the thrill of the chase or the idea of getting a deal or maybe it’s just the whole vibe of the auction house.  But whatever it is, I like them.  One of my favorite auctions is a classic car auction in Auburn, IN that occurs each year over Labor Day weekend.  It’s always a great time, particularly since it combines a live auction with another passion of mine – classic/collectors cars.  While attending this auction about a dozen years ago, I noticed large banners all over the place, with four brightly-colored letters: e-B-a-y.  I had some idea of what eBay was but never used it.  And although I figured it had a chance at hitting it big, I had no idea how explosive and widespread the growth of eBay would become. 

Another of my passions is real estate so you can imagine my curiosity with the growing trend of online real estate auctions.  I had the opportunity to watch one of these online auctions last week.  A client had expressed interest in a property that was being auctioned, so I had a front-row seat to the proceedings.  So, what did I think?

The silent sizzle.  One of the hallmark characteristics of a live auction is the rhetoric of the auctioneer.  Not only is this time-honored tradition a hard-earned skill but it also adds to the pace and energy associated with the bidding.  But with an online auction, the bidding is done in total silence, with each bidder fixated on their computer screen.  The bidders might be 1,000 feet apart or 1,000 miles apart but no matter – each is in their own little world, relying on nothing but a computer screen to track the bidding process.  But that doesn’t translate into a lack of excitement.  There actually is a great deal of anticipation as the clock winds down and the bid price mounts higher.  It’s just masked in total silence.

Last call.  Really.  Another great feature of a live auction is the fabled ‘last call’.  By injecting the threat of the auction ending, auctioneers use the ‘last call, going once, going twice’ phrasing as a way to build excitement and pricing.  I was curious how the online auction would handle this, as the flurry of online bidding during the final few seconds could turn into a real rats nest.  So it only made sense that the online auction would use an electronic version of ‘last call’.  Each time the clock ran down, it would magically get reset to 3 minutes.  This initially happened when the clock reached 20 seconds, then it was 15 seconds and the last few times, the clock wasn’t reset until it hit 10 seconds.  But during this particular auction, it was reset a total of 5 times.  And, despite the lack of ‘oohs and ahhs’ that accompany a live auction,the bids did in fact increase each time the online auction timer was reset.

The gavel still falls, just silently.  Whether online or live, the culmination of the auction is still the same – it ends.  Everyone knows the final number in both instances but with the online auction, no one knows the final bidder.  To my way of thinking, this isn’t all that different than a live auction, as many of the bidders are either unknown or carried forth by proxy bidders.  But with an online auction, we have no idea of who bid, when they bid, how many times they bid, nothing.  It is just a series of ever-increasing bids on a computer screen. 

So, was the process interesting?  Sure.  It is effective?  I guess it can be, particularly since I valued this property at around $1.75 million and it sold for $2.25 million.  But do I think that it is the future of real estate sales and will take off similar to eBay’s meteoric rise a decade earlier?  I think I’ll keep my auctions confined to ‘67 Corvettes and ‘60 Ferraris.  At least for the time being.