A Passion for the Portfolio
Auction.com gets excited about transparency, mobility and transactions.
When Auction.com’s Steve Price, senior vice president of foreclosure auction services, and Ravi Singh, chief product and technology officer, get together in the same room—digital or otherwise—the energy feels surprisingly similar to that of a live auction. They spend their days dedicated to what they describe as “The Journey” Auction.com has been on since it launched in 2007.
Price and Singh said that during the last few years, the Auction.com team has been working with the data from their exclusive listings in order to create a virtual experience that has the same interaction and energy that occurs at real estate auctions.
“A lot of what we have been able to do on the tech side over the last couple of years is inspired in large part by what Steve and his field teams have already been building with investors around the country,” Singh said. “It’s been our mission to create a comprehensive auction experience that provides real estate investors visibility, reliable data and high volumes of opportunities and, really, the empowerment that comes from transacting on a truly dynamic, evolving platform.”
By the time Singh is finished, Price agrees with such enthusiasm that the interview starts to sound and feel like a live auction. Clearly, these guys love what they do.
“Here’s the thing people tend to overlook about Auction.com: Buying real estate at auction is complex,” Price said. “Sure, it’s exciting, but it requires a lot of thought. Auction.com initially got a lot of comparisons to more traditional online auction sites like eBay, and because of this people expect the real estate auction process to be similar.”
Price and his team have made it their priority to work directly with real estate investors to make what he describes as “a complicated and exhilarating transactional process” streamlined, transparent and repeatable as often as an investor may wish.
Auction.com has hundreds of employees nationwide who are active in their local markets and are experienced in evaluating what will and will not work when it comes to
real estate strategy. Price said this is extremely important because buying a property at auction has been streamlined with Auction.com, but that does not make the process a “no-brainer.” Investors still must do the research, leverage the best data available to them and evaluate the profit potential behind the deal.
Working with the Field Team
Price recalled one investor in Michigan who had never bought a property at auction—online or in person—before visiting the Auction.com platform. The concept was doubly intimidating because the investor wanted to use Auction.com’s new remote-bidding feature to purchase a property in California. This particular buyer wasn’t sure how to get started. The Auction Services team helped educate and guide the buyer so he could make a property purchase that fit his investment goals.
“There were thousands and thousands of properties to sort through, and he had never done this before,” said Price. “He ultimately completed a transaction in the Inland Empire, and about four months later he started looking for a second
property to purchase. That first step, closing that first deal, is the first piece of the puzzle we examine when we are looking to evolve the way our platform works for our buyers.”
The next piece of the puzzle involves Singh taking insights from that investor’s experience to evolve the digital platform for all users.
“Real estate investors start out as average individuals who may not necessarily run a hedge fund or have experience in real estate as a top agent or full-time investor. It’s our goal to leverage what we’ve learned about our users over the years to bring more and more of the auction online. We want to leverage the simplicity of the process, as you experience it on Auction.com, to raise the volume of investments any investor can make in the real estate space,” Price said.
Singh agreed. “At the end of the day, we are an e-commerce platform selling a high-value asset class,” he said. “You can buy high-value stocks on investing platforms for just a few hundred dollars. You can buy baubles and trinkets on eBay or Etsy for just a few dollars. But to buy real estate, you need not only to have access to a platform that makes that complicated process simple, but also to be willing and able to do the serious due diligence that goes along with that investment.”
Combining Key Data Elements with Cutting-Edge Technology
Singh and Price agreed one of the most important things they do is “capture the mindset of the intentional real estate buyer.” This means identifying the key elements of a transaction that create an “easy glide path,” as Price described it, from the beginning to the end of a transaction.
“Our users are on a journey. When the journey goes smoothly, investors have all the key data elements they need to conduct their due diligence. They have the ability to easily conduct the transaction and they are able to repeatedly make successful financial decisions and acquire the right properties for their portfolios,” said Singh.
Price agreed. “At the end of the day, our product involves not only the ability to acquire a physical property via an online auction but the ability to do so repeatedly and at high velocity. This is not an insignificant investment, and that is why we invest so much into creating footprints in local markets so we can understand our buyers’ perspectives, and then ultimately translate their experiences into the user experience on our digital platform.”
Auction.com takes a stair-step approach to investor education. Using this approach results in a gradient of content that investors can tap into based upon their experience and comfort levels.
For example, real estate investors can learn all about buying foreclosures and bank-owned properties via educational articles and videos in the Auction.com Help Center. Investors can also utilize the property details pages and personal online dashboard to help them conduct their due diligence. The Auction.com app is also an increasingly popular platform for buyers to search and bid on.
“Ultimately, investors want to get to the point where they can have a smooth transaction and acquire the property that fits their needs,” said Price. “They really want a self-serve platform and that’s what we do. We help them get from not knowing how to acquire that property to being able to identify a good investment opportunity and close on it, whether it’s in person, on a desktop computer or remotely on our app.”
Adding Value with an Easy Glide Path
Price and Singh like to say they’re adding value by improving the experience of acquiring an investment property.
“We are constantly asking ourselves, ‘How can we arm the buyer with the right kind of
information so they can make the best decisions and capitalize on their investment opportunities?’” said Singh.
“We get excited about every single investor we bring into the marketplace,” Price added. “We are always looking for more opportunities and better ways for buyers to invest.”
Sidebar 1: Bringing Sellers into the Auction
Although most real estate investors are far more familiar with the buying side of Auction.com, the platform hosts many individual users who operate on the sellers’ side of the equation as well. “For years, Auction.com helped facilitate transactions between buyers and sellers. After about a decade of this approach, we were ready to bridge the gap between them,” Singh said.
“When we did that two things happened: We created something that required an even higher degree of visibility and transparency so that the sellers could understand the asset life cycle, and the asset’s journey from going to auction to eventually being sold.”
While adding what many investors might consider to be an “opposing party” into the mix, Price and Singh believe the move ultimately helped all users gain a new level of comfort with the online platform and expedited the “maturity” of Auction.com.
“It enabled us to deconstruct the ‘think work’ and engagement that happens on the platform and then build the system back up around all our users,” said Singh.
The inclusion of sellers in the system led to insights and refinements of the company’s new remote bidding application. This has, essentially, led to increased “digitalization” of the courthouse steps, said Singh.
Those steps may have been digitized just in time. Today, Auction.com offers remote bidding, meaning buyers can bid remotely from virtually anywhere in 14 states and expanding.
Price noted that COVID-19 has complicated the expansion process. Although remote bidding is increasingly popular, foreclosure auctions are experiencing extended lulls while the state and federal governments figure out how to handle the economic fallout stemming from double-digit unemployment rates as well as unpaid rents and loan payments. However, as counties nationwide start to reopen and eviction moratoriums lift, remote bid will resume expanding into more markets.
Sidebar 2: Where Auction.com Experts See Foreclosure Activity Heading
In every economic downturn, the question eventually surfaces: “When will the next big wave of foreclosure properties begin?”
This may be one of the only ways in which the current coronavirus economic cycle resembles other economic cycles throughout history. This particular downturn, however, could end up demonstrating some unusual foreclosure trends.
“Sales rates are higher today than they have been in a very long time, and investors are responding to the lack of inventory across the board with extremely strong demand. Unemployment is at record highs, but there is currently a disproportionate impact toward rental residents over homeowners. On top of all that, interest rates are starting to dip below 3 percent,” said Price. “What we are seeing is a lot of investors coming in and purchasing at higher volumes than they have historically. This will be fine as long as they adjust their entry and exit point and their risk appropriately.”
Price and Singh noted forbearance programs inevitably end. When they do, there will be an uptick in foreclosure inventory sometime this year or next. They both agree that the current economic dip will not include a foreclosure crisis like the nation experienced in 2008.
“We are still seeing healthy demand fueled by interest rates, so we will probably see some regionalized market pressure in 2021, but nothing like what we saw in 2008,” said Price.
“Everyone is an armchair economist right now. We all want to try to predict the unpredictable and figure out how unemployment, COVID-19, and any other issue that arises will affect the economy and real estate market. It is impossible to know for sure, but I expect the market will reach a level of stability and then we will return to what investors consider normal,” Singh added.
