Tang: There are some great auction companies out there, but we found that many of them just aren’t set up to auction real estate. There are a host of inefficiencies inherent to running a real estate auction in a hotel ballroom. Running the auction on-line is the solution to this. But for us, as sellers who wanted to maximize values, the key to running successful auctions was to get the right people—the local brokers —promoting real estate auctions. And that’s what AuctionPoint was developed to do, to give brokers the ability to create, market and run real estate auctions online.

GlobeSt.com: What is the role of a broker in an auction setting?

Tang: The role of the broker essentially remains the same; and that is to market the property—in this case the auction—to the logical pool of buyers. But the message to the buyer pool changes in an auction. Instead of setting a high asking price and waiting for an offer, in an auction, the starting bid is set aggressively low, usually at 50% of current market values, and a date for the auction is set in advance. This date-certain creates a sense of urgency among the buyers, and the low starting bid creates a competitive environment on auction day that has the buyers competing against each other until maximum market values are achieved.

GlobeSt.com: Is the broker the best person to market an auction?

Tang: Absolutely. The broker has the best knowledge of local market conditions, the property, comparables and the local buyer pool. Therefore, the broker is best able to package the auction, set a starting bid and market the auction to the right people. Instead of attracting only auction bottom-feeders to the auction, the broker is able to attract those buyers that are willing to pay the most for the property.

GlobeSt.com: How’s business? Are you seeing any new trends in the auction market this year?

Tang: Business is great. For a couple of years now, everyone in the industry expected to see a flood of bank-owned properties hit the market, but that hasn’t happened yet. However, since January 2011, we’ve experienced a noticeable increase in new auctions being set up by brokers representing banks or sellers in short-sale situations. I think that’s due to a couple of factors. Many community banks are approaching the holding limits on some of their REO assets, and that fact, combined with a slight loosening of the credit markets, are creating a better environment for banks to be thinking about disposing of REO assets.

GlobeSt.com: Auctions seem to thrive in down markets. Do you expect to be around when the market eventually recovers?

Tang: The difference for the auction industry this time around is that internet technologies have matured to the point that running auctions on-line has not only become cost-effective, but are now accepted by buyers and sellers as a legitimate way of transacting a real estate deal. We have Ebay and online stock trading to thank for paving the way for online real estate auctions. When the real estate markets recover, it’s quite possible that the popularity of online real estate auctions actually increases. When developers start building for-sale projects again, auctions are going to be a great way for them to time their exits. My prediction is that real estate auctions are here to stay.