Real Estate Auctions Cut through the inefficiencies of the traditional sales process, finding sellers the right buyer in an average of 100 days from marketing to close.
NON Distressed REAL ESTATE AUCTIONS establish a property’s value from the start and then find the right buyer in a timely fashion with as little back and forth as possible.
“The way traditional sales are done is fundamentally backwards,” says Ten X Auctions, who describes the inefficiencies of the normal process: “I give you a bit of information, and then you give me the price you’re willing to pay, and then I give you the rest of the information, and then you adjust your price, and now we’ve been going back and forth for months.”
“When you’re selling a property, by the time you get through the first and second round of offers, then the best and final round and pick an investor, it’s taken five or six months,” adds Jacobs. Only then does the due diligence begin, after which, “a majority of the time you get a retrade.” In the end, months after going to market, the result is a deal for a lower price than the initial offer. “It becomes a negative experience,” says Jacobs.
With Ten-X, this order of operations is turned on its head. “The buyer does the due diligence before making an offer,” explains Jacobs. “As a buyer, by the time you come to the auction, you’ve read the rent roll, you’ve toured the asset, you’ve looked at the financials, you’ve seen the property condition report. You’ve had access to best-in-class CoStar data and documents. All the stuff that you typically have to do post-contract, you’ve already done beforehand.”
This transparency benefits both sellers and buyers. For sellers, they can complete a sale in a fraction of the time as a traditional deal while retaining a similar degree of control over the price thanks to their ability to set a reserve price under which they can choose not to accept an offer. For buyers, not only do they have all the information before making a bid, but the process is transparent and fair, what Jacobs describes as “an even playing field.”
Stressed Not Distressed
While auctions are a time-tested and common method of sale, many still associate the process primarily with distressed or otherwise undesirable properties.
“Auctions are just another transaction method.” explains Jacobs. “They accelerate the transaction and provide certainty, whether a property is stabilized, value-add, or distressed.” Because of the platform’s due diligence, international buyer profile and transparent bidding, a Ten-X auction results in a sale where a property is purchased for its true value.
That being said, in a market where many sellers are becoming stressed due to factors relating to their capital stacks, being able to find a buyer in a timely fashion for the right price can keep an asset from becoming distressed. “A lot of problems are tied to the capital stack, not the property per se,” explains Jacobs. “A lot of investors bought in 2020 and 2021 at a floating low rate and now the terms are up and they’re going to default.” For these sellers, three extra months of holding onto a property can be the difference between defaulting and not.
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