SOURCE: Gwent Group

Gwent Group

February 09, 2011 16:23 ET

Real Estate Auctions Account for Estimated $74.8 Billion in 2010, According to Gwent Group Study

BLOOMINGTON, IN--(Marketwire - February 9, 2011) - Real estate auctions accounted for $74.8 billion in sales during 2010, according to a new estimate by the Gwent Group, which first began tracking the auction industry in 1985. And with personal property included, auctions during the year came to more than $284 billion.

The figure includes live sales, government sales, estate and private "boardroom" sales, sealed bid auctions and Internet auctions, according to Gwent Group Chairman Steve Martin.

"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 Martin. "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," said Martin.

The total also includes the toxic, non-performing paper sales by financial institutions of their non-performing, pre-foreclosure sale of mortgages, according to Martin.

"We're expecting to see a dramatic increase in the use of auctions for commercial real estate and residential marketing in 2011 and 2012," said Martin. "The weakness in commercial real estate has been seen in the shortage of bidders at many sales. Farmland auctions were strong, because farmland has been the strongest of all real estate sectors in the past year or two."

Meanwhile, there is tremendous buying power on the sidelines, Martin added. "Corporate America has $1.2 trillion more than normal in cash reserves, and once fundamentals show improvement, this cash will enter the market provide support for prices."

Another factor, he said, is that $1.3 trillion worth of real estate is due to be refinanced through 2012, and lenders are reluctant to take ownership of those properties due to the large amounts of owned real estate (REO) 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 non-performing paper at auction," said Martin.

The Gwent Group, headquartered 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.

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    Carl Carter
    Steve Martin