Real Estate Auctions Account for $74.8 Billion in 2010

A new estimate by the Gwent Group found that real estate auctions accounted for $74.8 billion in sales during 2010.

By including personal properties, auctions surpassed more than $284 billion in 2010. The overall figures include live sales, government sales, estate and private “boardroom” sales, sealed bid auctions and Internet auctions.

“Our review of the industry takes in a broad range of activity, reflecting that competitive bidding amounts to an auction regardless of the heritage or training of the person soliciting and accepting the bids,” said Steve Martin, chairman of Gwent Group. “Online auctions have become a major part of the U.S. economy, even though very few of those conducting these auctions are in fact auctioneers in a traditional sense.”

Martin said the total also includes the toxic, nonperforming paper sales by financial institutions of their nonperforming, preforeclosure sale of mortgages.

Martin is speculating that the commercial real estate and residential marketing will use auctions heavily in 2011 and 2012.

“The weakness in commercial real estate has been seen in the shortage of bidders at many sales,” Martin said. “Farmland auctions were strong because farmland has been the strongest of all real estate sectors in the past year or two.”

There are two reasons why Martin feels auctions will continue to be successful. The first is the $1.2 trillion in reserves waiting to be invested and the second is the $1.3 trillion in real estate money that will be refinanced through 2012.

“CorporateAmerica has more than normal in its cash reserves and when fundamentals show improvement, this cash will enter the market provide support for prices,” Martin said. “Lenders are also reluctant to take ownership of these properties due to the large amounts of owned real estate already on their books. If anything, the institutions are trying to clean potentially toxic assets off their balance sheets by packaging the assets and selling the nonperforming paper at auction.”

Gwent Group, based in Bloomington, Ind., is a management consulting firm specializing in service to title holders of real estate wishing to reallocate their asset base and industry clients. The company has been tracking the auction industry since 1985.