Builders, large and small, know the advantages of building and designing model homes in their communities. Even in the age of pioneering technology, a fully furnished model serves as the first in-person impression and allows buyers to physically envision themselves living in the space.
When the community sells out or when the model is no longer needed, it goes up for sale. Builders, motivated to raise profits and reduce expenses, then have several options for dealing with the staged pieces within the home. Top choices include selling the furniture to the model buyer with the home purchase, moving the items to another model, storing it for a future model, or liquidating the assets by selling to employees, using an auction company, or giving to local resale or consignment companies.
“We do a couple different things,” says Chrissie Hartle, regional sales specialist at Ryan Homes, an NVR brand. “We do reuse our furniture in our models at times, and there are times where we do just say we’ve used this furniture long enough and let’s liquidate it.”
Live and In-Person
If the liquidation route is chosen, Houston-based Builders Auction Co. has helped builders across the country with auction services since 1996. Leading national builders annually represented on the Builder 100 list, including David Weekley, Lennar, Meritage Homes, Mattamy Homes, Taylor Morrison, M/I Homes, NVR, and more, have all used the company’s services to liquidate a model’s contents.
For the traditional, in-person auction that the company had practiced for over 20 years, the builder would collaborate with the auction team to set a date and send out notices of sale to local prospective bidders. Then on the day of, the team would arrive at the model, arrange and catalog the furnishings, cover the floors to reduce the risk of damage, register bidders, and sell the contents within a couple of hours.
“From the start, there were plenty of people to fill the house, but that eventually became a concern of mine, and it was a pain point for the builders,” says Bruce Sutter, president and CEO at Builders Auction Co. “Rightfully because they were fearful of too many people in the house, mostly for what could be the damage or perceived damage for the new homeowner.”
When the coronavirus pandemic hit earlier this year, Sutter and the Builders Auction team were unable to host in-person auctions at models and decided to quickly shift the process to online, in order to continue serving builders at a peak time of uncertainty.
Before COVID, Sutter had considered moving the company’s operations online, but he “felt that a lot people would lose their jobs or some folks in the company wouldn’t want to go in that direction,” he says. “So, when the COVID crisis happened, there was no choice.”
Virtual Benefits
To move its services online, Builders Auction Co. discovered an online bidding platform and decided to post photos, dimensions, and descriptions of the various model’s contents to its website during set auction times.
Users are able to view upcoming auctions, register for email alerts, and bid for items directly from the website. When an auction starts, locals have 40 hours to bid and rebid on items of their choosing. From there, winning bidders will pick a time slot to pick up their furniture curbside or they may elect to utilize a mover and have it delivered. Besides a few staff members and the professional movers, no one is allowed in the home to ensure proper social distancing.
“People don’t necessarily want to go and spend time at a live auction, even though it’s entertaining,” says Sutter, noting that the switch to online makes much more sense from a business standpoint.
Although the transition from in-person to online was unanticipated and quick, participating builders have been surprised at the results. Some of the benefits include:
- Potential higher revenues. On a per-item basis, builders using online auctions are earning 10% to 20% more—and sometimes up to 50% more—than with a live auction.
- More bidders. The number of bidders has also increased with a live auction, since bidders don’t have to leave home.
- More time for bids. With a 40-hour bidding period, bidders have plenty of time to research the items and make their bids.
- The ability to sell more items. Because the model is full of people during a live auction, safety dictates a limit on the number of items that can be sold. In an online auction, builders can bring in items from other models and fill the entire space with merchandise.
- Fewer people in the home. Limiting access to the model to just staff and professional movers lessens the chance for damage or wear and tear to both the goods and property.
- Better traffic management. Builders Auction Co. assigns winning bidders a pickup time and limits curbside pickups to 10 people per hour.
“You would never know that anything changed, as far as the process is concerned,” explains Hartle. “It still is the same process, except you’re bidding on a computer instead of in-person. Everything else has been seamless.”
Alicia Schwarze, director of operations at Dallas-based Trophy Signature Homes, a subsidiary of Green Brick Partners, agrees. Her first online auction with Trophy made more revenue than the traditional, in-person approach, due to more interested online bidders.
“To me, I like it better,” says Schwarze. “Even if COVID goes away, which I hope it does, I think I would still want to do virtual auctions.”
