By Dr. David Gonzalez
The real estate market in California and across the country is seeing a radical shift. From a continual decrease in real estate brokers to a newer trend showing the decrease in the number of active agents, it is clear the market is changing.
Part of what we are seeing is a transition away from traditional real estate sales, to an online, auction format. According to the National Association of Realtors, “The majority of auctions today don't result from foreclosure of distress situations, but rather are the result of a seller choosing a cost-effective, accelerate method to sell a property.”
Gone are the days of auctions being the last resort for selling property.
The auction process often results in the sellers obtaining the funds from the sale much sooner, and buyers are able to take advantage of a competitive bidding process. The internet especially is making the auction process easier than ever before.
The real estate auction industry is being spearheaded, in part, by a company called Concierge Auctions. Concierge labels themselves as a “smart way to buy and sell luxury properties.”
Next week, Concierge Auctions is actually holding an auction right here in California, in Palm Desert. The property boasts “astounding mountain, canyon, and course views greet you each and every day from your expansive patio and your vast open floor plan.”
Despite the slick marketing material and the benefits of having a “Shark” from Shark Tank as an advisor, once you look into the record of Concierge Auctions and the lawsuits that have been filed against them, they become a cautionary tale to anyone considering using an auction company to buy or sell property.
The Real Deal reported earlier this year about a lawsuit filed by Joanne Brown, who detailed how Concierge Auctions had not informed her of the two lowest bids on her property. Without those key pieces of information, Joanne was provided a false impression of what she could expect from using Concierge.
The winning bid ended up being nearly half of what the executives at Concierge indicated they would be.
And it is not just sellers who are unsatisfied with Concierge Auctions’ record. Howard Appel, along with his partner, sued Concierge for having them bid on a property that the owners had already told Concierge wasn’t for sale- which clearly went against their agreement with the company.
According to the Wall Street Journal, not only has Concierge Auctions been sued far more often than similar companies, half of the lawsuits filed against Concierge are for “using some form of dummy or fake bidder, either to artificially drive up the price of homes, or to make it appear to sellers that there was more interest in their homes than there was in reality.”
There is even an account from someone who admits that Concierge paid them to be a shill bidder.
In 2015, Robert May sued Concierge Auctions, claiming that it had recruited him to place a fake bid on one of their properties in Idaho. Despite Concierge executives repeatedly stating that May would not win the auction, he did.
A new lawsuit filed against Concierge Auctions earlier this year detailed the horrible experience of sellers right in our area. These sellers, out of neighboring Sonoma County, used Concierge to put two of their properties up for auction.
Throughout the entire process, according to the lawsuit, Concierge provided the sellers with bad advice that resulted in the properties being sold for a much lower value than expected. Concierge didn’t even keep up their end of the most basic parts of the agreement- like how long to keep the auction open for and that there should be an attempt to sell the properties as a package deal.
And if the other lawsuits weren’t warning enough, one of Concierge Auctions African-American real estate agents sued Concierge for the company’s discriminatory practices. Ms. Hicks explained that “as a result of defendant's discriminatory practices, she has lost hundreds of thousands of dollars in commissions.”
New technology has provided incredible opportunities for buyers and sellers of real estate to reach new markets and turn a profit quickly. Despite these advancement, it still remains critical for anyone attempting to buy or sell property to read the fine print and do your research on the company, before you get scammed out of house and home.
Dr. David Gonzalez is an assistant professor of public administration and organizational leadership with Brandman University’s School of Business & Professional Studies.