The iconic Chet Holifield Federal Building, known as the “Ziggurat,” located in Laguna Niguel, California, has been up for auction for five months, with a unique selling process that allows participants to control the deadline. The initial auction deadline was July 31, but due to a “soft close” rule, if a higher bid is made within 24 hours, the auction is extended for another 24 hours. This has led to a continually rising price for the property, going from $136.8 million to $169.2 million as of Thursday.
Auction expert Peter Cramton explains that this method allows participants to act like human auctioneers by extending the bidding process. Despite initial skepticism, research shows that soft-close auctions are effective in ensuring that the property goes to the bidder who values it the most, ultimately benefiting both the seller and the buyer.
Online technology has had mixed success replacing the auctioneer’s role, with platforms like eBay favoring hard deadlines and Amazon attempting a soft-close method in the past. Daren Blomquist, a real estate expert, notes that soft-close auctions can provide valuable information to buyers, helping them avoid overpaying for a property.
While soft-close auctions are more commonly used for long-term development properties like the Ziggurat, experts like Cramton suggest that auctions could be more widely used to sell residential properties, maximizing pricing and efficiency. The ongoing auction of the Ziggurat has provided a real-time example of how this unique selling process can impact the final price of a property.
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