There is a lot of press swirling around the Northern Virginia Auctions that are popping up all over Northern Virginia. Mega ads are running in all of the papers, yellow signs line the streets and ballrooms are booked for multi-day events.
Let’s step back a couple of years and take a look at the home buying process in Northern Virginia. As a buyer you went out with your Realtor® (hopefully) or you made the Sunday rounds at Open Houses looking for just the right house. When you found it you frantically put together a contract in hopes that the house would be yours. Within hours you learn the house had multiple offers on it and if you wanted it you were going to have to “up your offer” in order to be the winning bid. Since you had no idea who your competition was or what they had offered you had to take a calculated risk and decide whether to pass or make a new offer. After days of negotiation you found out whether you had won the house or were going to have to wait for the next one.
Now fast forward to today. A house is listed as an auction property. Whether it is at the home itself or in the ballroom the auctioneer picks a starting price and bidding begins. Some homes bring a flurry of activity and others sit quietly on the sidelines. The crowds get anxious checking out their competition and everyone is figuring out their strategy to decide whether they are going to be able to outbid the competition for the home they want.
So what is the difference between the two processes? No matter how you spin it the market a few years ago was an auction market. The primary difference was that the earlier auctions were “silent” auctions. You didn’t know what the other bids were, you didn’t see the competition and you had to wait to find out whether you had the winning bid or not. Today’s auctions are out in the open. If it is an absolute auction (few are) you know as soon as the auctioneer says SOLD that they house is yours. If it isn’t then you are waiting for the bank to decide whether they will accept your bid or not.
So when you read about the housing auctions being new phenomenon in Northern Virginia real estate don’t be fooled. No one screamed this house is going up for AUCTION TODAY a few years ago but houses were being auctioned to the highest bidder. The major differences are in the marketing strategy and the hype. So if you are thinking about buying a house in today’s Northern Virginia market realize that there are plenty of good deals that don’t require you to make decisions under the pressure of an auction.