How Will the New User-to-User Auctions Affect the Land Market

[Prokofy Neva]

It seems the auctions are now live.

I may try them, just to see how it works, but I see that you can't sell as a group, which means you'd have to withdraw land from a group, losing its 10% bonus, so you'd have to have a float available to cover that at least for the week of the auction.

I wonder if this will get much use -- I think it might.

It will be an alternative to abandoning land, which will be a good thing. If it is easy enough to do, people may try it before abandoning. But abandoning often happens at last minute when land that people wanted to sell and priced too high for the market doesn't sell, and after lessening it a little, they abandon it. They should at least try selling it even for $100, as they will get at least that. But many don't want to bother.

The 15% commission the Lindens take seems like quite a bite, but they look for revenue wherever they can find it. And if more people succeed in selling land this way, especially more end users, it may be worth it to people.

One down side I can think of, is that people will use auctions to force people to buy land who are near them for fear of "losing the view". If land is priced high and the seller waits, or it is abandoned, there may be long periods when a land isn't vulnerable to "ruin-the-view". But now, with way more an audience presumably, people might price lower and try to force a buy.

There are so many variables that it is hard to see what the impact is. We will know when Tyche shows less abandoned land, for example. Or perhaps the Lindens will provide some figures of how many lots sold through this system, and the average sale price.

SL is too big, there is too much land for sale, and the search list in land-for-sale too long that it's hard to reach the market. Will this system worsen or alleviate that problem? Even if you are willing to buy a classified or at least put your land in search/places, that may not help.

People also have a habit of putting land for sale for ridiculous prices as a way to advertise rentals or other businesses -- because again, there is so much pent-up sales activity without good advertising capacity. This is why I always advocate having the Lindens bring back infohub ad boards that we used to have and pay for.

 

[ChinRey]

2 hours ago, Prokofy Neva said:

...

but I see that you can't sell as a group

...

No group land auctions? That may become a major obstacle but we'll see.

[Qie Niangao]

2 hours ago, Prokofy Neva said:

... I see that you can't sell as a group, which means you'd have to withdraw land from a group, losing its 10% bonus, so you'd have to have a float available to cover that at least for the week of the auction.

I think it only needs to be momentarily owned as an individual, just long enough for it to transfer into the AuctionServices "escrow" account for the duration of the auction. Per the "Creating your own auctions" page:

Quote

When you create the auction, the ownership of the parcel is transferred to a temporary holding account named AuctionServices Linden. You will no longer be listed as the owner. You will not be able to edit, cut, sell, or change the parcel in any way once you create the auction. If you cancel the auction, or if the auction completes without any bids, then the ownership of the parcel returns to you.

So if the auction doesn't get an opening bid, there would need to be spare tier to absorb it when it reverts back to one's individual ownership. Otherwise, though, I'd expect to get by with "borrowing" individual tier by under-contributing to a group for a few minutes to set up the auction.

I do think this will be interesting to watch, although not quite as interesting as I'd originally expected. That 15% commission seems reasonable, I guess, but it decreases auctions' benefit to market liquidity.

[Alyona Su]

It means virtual land will sell for what it's really worth. No ridiculously over-priced parcels just because it's next to a road or water. As for the land-barons: their business model will change. Because they are paying tier on all their properties so they need to flip them. To do that they have to guesstimate the selling price: too high and it will never sell; too low and they lose potential profits. So auctions are the best bet - so long as the minimum isn't set too high.

What they, the land-barons, need to also take into account is the buyer's market: a lot more of that market will begin shopping auctions, where they only shopped for-sales before.

As stated, it's going the be interesting (and fun) to watch how it all unfolds.

OH, and there is also the 30L per week listing in search requirement also. So... don't know if the land-barons will be willing to suck-up that charge, also LOL

Edited March 27, 2019 by Alyona Su

[Qie Niangao]

7 hours ago, Alyona Su said:

So auctions are the best bet - so long as the minimum isn't set too high.

I just realized why the 15% commission is good for the market.

Suppose I set out to flip a parcel and subscribe to the greater fool theory of pixel real estate: list it for more and some fool may pay the price.

With auctions, I can't just set a stupidly high price, I need to set a stupidly high minimum bid. How ever shall I lure the fools to pay? 

I shall enlist my confederate alt to bid above my stupidly high minimum, possibly tricking the fools to bid even higher.

This will usually fail. The 15% commission creates a little friction to repeating the lure auction after auction, the auction equivalent of the perpetually overpriced parcel that nobody ever buys until some fool actually does.

[Fionalein]

4 minutes ago, Qie Niangao said:

I just realized why the 15% commission is good for the market.

What makes you so sure the flippers will not just bid on user owned land and then set it to sale in world as they used to?

[Qie Niangao]

8 minutes ago, Fionalein said:

What makes you so sure the flippers will not just bid on user owned land and then set it to sale in world as they used to?

Oh, they very well may, but then it's just the same situation as before. Sorry if I gave the wrong impression: I don't expect auctions to solve the "greater fool" flipping thing, but without the 15% commission auctions could have made it worse.

[ETA: Hmm. Maybe it will make it worse anyway. I have to think about this. I would expect that ordinary landowners would offer land to auction instead of abandoning it. I like that, in the abstract, but it does mean there's a whole lot more land available more easily to flippers. Will they fall for it? Will they find a way to turn a profit on it, despite the 15% commission? This may turn out to be interesting after all.]

Edited March 27, 2019 by Qie Niangao

[LittleMe Jewell]

I'll try inworld sales first in order to avoid the 15% commission.  The problem with the auction, in my eyes, is the fact that my account will end up with tier fees if the land doesn't sell and bounces back to me - whereas currently, I pay no tier fees because the land is in the group and the tier is donated by multiple Premium accounts.  Thus that part combined with the 15% fee will keep me probably trying to continue to just sell inworld. 

[Prokofy Neva]

17 hours ago, Qie Niangao said:

I think it only needs to be momentarily owned as an individual, just long enough for it to transfer into the AuctionServices "escrow" account for the duration of the auction. Per the "Creating your own auctions" page:

So if the auction doesn't get an opening bid, there would need to be spare tier to absorb it when it reverts back to one's individual ownership. Otherwise, though, I'd expect to get by with "borrowing" individual tier by under-contributing to a group for a few minutes to set up the auction.

I do think this will be interesting to watch, although not quite as interesting as I'd originally expected. That 15% commission seems reasonable, I guess, but it decreases auctions' benefit to market liquidity.

Qie, your theory works only if there is no bid in a day. But likely there will be, or at any rate, you have to plan for that, and it means covering the tier for that singly-owned piece, now out of a group. You can't leave a group under-tired for a week while the auction lasts.

[Prokofy Neva]

12 hours ago, Alyona Su said:

It means virtual land will sell for what it's really worth. No ridiculously over-priced parcels just because it's next to a road or water. As for the land-barons: their business model will change. Because they are paying tier on all their properties so they need to flip them. To do that they have to guesstimate the selling price: too high and it will never sell; too low and they lose potential profits. So auctions are the best bet - so long as the minimum isn't set too high.

What they, the land-barons, need to also take into account is the buyer's market: a lot more of that market will begin shopping auctions, where they only shopped for-sales before.

As stated, it's going the be interesting (and fun) to watch how it all unfolds.

OH, and there is also the 30L per week listing in search requirement also. So... don't know if the land-barons will be willing to suck-up that charge, also LOL

Actually, the land barons WILL be the ones willing to suck up both 15% and 30L charges. It's the little guy who won't, so land barons will go on dominating the market. And that's normal, as they have the capital to sustain the long waits for their sale price. The reason there is so much abandoned land is that most people don't have that.

[Marianne Little]

Ok, so if a group of 2 premium avatars hold a 1024 + 1024 + 10% group bonus, how do I sell it on auction?

As I understand it, the whole land has to be divided in 2 parcels of 1024 plus the bonus land in a separate part, and the 10% group bonus must be abandoned.

The 2 parcels of 1024 must go on auction for the 2 different avatars.

And what if I don't sell? I have lost the bonus land, the land is not so attractive for a group anymore.

Because, if 1 avatar hold more than 1024m in a second, it is billed for it. If I will keep the bonus land, I must pay 4 USD for that small part.

If I will sell the land as a total, as it is, I am billed 4 + 7 USD the moment I take the land for myself. Nevermind that the other was my alt.

Does it work like this?

It appears that I am better off selling inworld.

 

[ChinRey]

1 hour ago, Marianne Little said:

Ok, so if a group of 2 premium avatars hold a 1024 + 1024 + 10% group bonus, how do I sell it on auction?

As I understand it, the whole land has to be divided in 2 parcels of 1024 plus the bonus land in a separate part, and the 10% group bonus must be abandoned.

The 2 parcels of 1024 must go on auction for the 2 different avatars.

And what if I don't sell? I have lost the bonus land, the land is not so attractive for a group anymore.

Yes, that pretty much sums up the group land issue. Also, keep in mind that you have to cover a full month's of tier even if you own a piece of land for only a few seconds.

Edit: here's an example how it works. Let's say you have a a 2252 m2 group owned parcel with tier from two premium membership owners. You want to auction it off without risking additional tier costs. This is how you have to do it:

1. Spilt the parcel into three, two 1024s and one 204.
2. Get both owners to withdraw their tier allotments from group
3. Sell one 1024 m2 parcel to each owner
4. Abandon the 204 m2 parcel
5. Auction the two 1024 m2 parcels separately

Edited March 28, 2019 by ChinRey

[Qie Niangao]

1 hour ago, Marianne Little said:

Ok, so if a group of 2 premium avatars hold a 1024 + 1024 + 10% group bonus, how do I sell it on auction?

Yes, I think if you're wanting to sell all of a group's land holdings in a single auction, either that 10% bonus is going to be abandoned or somebody is going to have to tier-up; as you say, you're better off selling in-world.

To be honest, I think most land sales will continue to be in-world, but for an individual an auction is better than abandonment. For a land dealer, there may be a different role of auctions, but there will still be a role for holding an inventory of for-sale parcels: land buyers won't all watch the auctions patiently for their perfect parcel.

Returning to the group land thing, though, I'm not following this:

5 hours ago, Prokofy Neva said:

Qie, your theory works only if there is no bid in a day. But likely there will be, or at any rate, you have to plan for that, and it means covering the tier for that singly-owned piece, now out of a group. You can't leave a group under-tired for a week while the auction lasts.

Probably I'm just misunderstanding, but let me try an example and see where I'm missing a step.

Suppose I have a group that owns 4096+1024+10% to which I've contributed all my tier and now I want to auction-off 1024 of that. I'll need to own that 1024 as an individual in order to set it for auction, but I can't simply have the group sell me that 1024 because even if I withdraw the group contribution with sale, I'm left short the group 10% bonus on that 1024.

Instead, just before I want to list that parcel for auction, at that point I withdraw 1024 tier contribution for the group (which momentarily makes it overdrawn by 1024+10%), and sell it to myself (leaving the group still overdrawn by 10% of 1024).

Now I follow the instructions at "Creating your own auction" and set the parcel for search, go to its Place Page, click "Auction This Parcel," fill in the fields, and click "Create Auction." According to that link, "when you create the auction, the ownership of the parcel is transferred to a temporary holding account named AuctionServices Linden" so now I should have 1024 of individual tier freed-up, which I use to "make good" on the group's overdrawn 10%.

If the parcel gets a bid the auction will complete with ownership transferring from AuctionServices to the high bidder, and AuctionServices pays me the proceeds less commission.

The part I see getting tricky again is if I choose to cancel the auction or the auction runs to completion with no bid, In either of those cases the parcel reverts to my ownership -- so at that moment I better have individual tier free to cover it. Even so, as long as I haven't spent that 1024 on other land, I can again withdraw it from the group leaving it overdrawn by 10% of 1024, absorb the unauctioned parcel just as the auction closes or I cancel the auction, then redeed it to group selecting "Owner Makes Contribution With Deed."

I'm not sure what happens if the auction winner turns out not to be able to accept the parcel for whatever reason. This should be rare, but I know it happens sometimes in regular Governor-owned parcel auctions. I doubt it ever reverts to the original owner, but instead it's probably treated the same as a failed Governor land auction: usually relisted with a L$0.5/sqm minimum bid at a future auction and returned to the Abandoned pool if still no bid is received. 

Edited March 28, 2019 by Qie Niangao

[ChinRey]

32 minutes ago, Qie Niangao said:

The part I see getting tricky again is if I choose to cancel the auction or the auction runs to completion with no bid, In either of those cases the parcel reverts to my ownership -- so at that moment I better have individual tier free to cover it. Even so, as long as I haven't spent that 1024 on other land, I can again withdraw it from the group leaving it overdrawn by 10% of 1024, absorb the unauctioned parcel just as the auction closes or I cancel the auction, then redeed it to group selecting "Owner Makes Contribution With Deed."

Yes, you can do it that way but it gets horrendously complicated and you have to get the timing right. How long is it safe to keep a group under-tiered btw? I think it's 24 hours officially, but I think somebody mentioned something about groups having land force-abandoned faster than that.

The more I look at it, the more convinced I am that this is mainly for land flippers, people who can keep a continuous rotation of parcels listed on auction. This is how you really should run land auctions:

1. Get a premium membership (of course)
2. Buy a cheap 1024 m2 parcel and offer it on auction
3. Keep repeating #2 as fast as you can

As long as you keep an eye on the auctions and make sure you never have more than one parcel on your hand at any given time, the only limit to how many such parcels you can have without increasing you tier, is how fast you can find them and list them. That means it's time for

 

The Return Of

The Land Flipper Bots

(Coming soon to a sim near you)

 

32 minutes ago, Qie Niangao said:

I'm not sure what happens if the auction winner turns out not to be able to accept the parcel for whatever reason.

Did LL consider this?

One possible answer: AuctionServices Linden abandons land, leaving the seller with nothing.

Edited March 28, 2019 by ChinRey

[Qie Niangao]

11 minutes ago, ChinRey said:

Yes, you can do it that way but it gets horrendously complicated and you have to get the timing right. How long is it safe to keep a group under-tiered btw?

This was years ago now so things may have changed, but I once accidentally left a group overdrawn (by a substantial amount of tier -- at least 512) for months. Now, at the time, I had plenty of spare tier in other groups I controlled, but this one slipped through the cracks until I discovered that one's tier contributions are silently removed the instant one leaves a group.

To play it safe, I agree that one would want to keep the timing tight, but I don't think there's any uncertainty around the schedule. One certainly knows when they cancel the auction themselves, and there's a scheduled time for completion of an auction, so that can be a brief window too -- albeit not necessarily a convenient window.

Also, this all assumes the seller sets such a high minimum that it takes a while to get an opening bid. Once somebody bids, I think the seller is off the hook.

[ChinRey]

27 minutes ago, Qie Niangao said:

Also, this all assumes the seller sets such a high minimum that it takes a while to get an opening bid. Once somebody bids, I think the seller is off the hook.

That's true. Unless the bidder fails to pay that is. We still don't know what happens in those cases.

There are two ways to ensure that people don't get nasty tier surprises when unsold parcels are returned to them. One is to include an auto-relist function, the other to put unsold parcels "on hold" until the seller confirms that they are ready to take them back. Of course, both of those mean there won't be any limit to how many parcels a single person can offer on auction without ever having to pay for additional tier...

Edit: turns out there may be one expense, parcels that are offered for auction need to be listed in search and that's a 30 L$ fee.

Edited March 28, 2019 by ChinRey

[Alyona Su]

1 hour ago, Qie Niangao said:

I'm not sure what happens if the auction winner turns out not to be able to accept the parcel for whatever reason.

 

I'm not sure what happens if the auction winner turns out not to be able to accept the parcel for whatever reason.

I wonder how this can possibly happen. Once you place the bid the amount of your bid is removed from your account immediately and put into "escrow" - if you are outbid that money is returned to you. Otherwise, if you win the auction you now own the land whether you want it or not.

Edited March 28, 2019 by Alyona Su

[ChinRey]

3 minutes ago, Alyona Su said:

I wonder how this can possibly happen. Once you place the bid the amount of your bid is removed from your account immediately and put into "escrow" - if you are outbid that money is returned to you.

It does happen if only on rare occasions. It may be a illegal funding, it may be that the bidder is banned before the auction ends or that their premium membership expires, or it may of course be a glitch int he system every now and then.

[Alyona Su]

2 hours ago, ChinRey said:

It does happen if only on rare occasions. It may be a illegal funding, it may be that the bidder is banned before the auction ends or that their premium membership expires, or it may of course be a glitch int he system every now and then.

Oh, good point. I hadn't thought of those. I am so naive. LOL

[Sarahbuxso]

Alyona have you ever sold a parcel, if so you're a land baron.. just saying.

[Alyona Su]

16 hours ago, Sarahbuxso said:

Alyona have you ever sold a parcel, if so you're a land baron.. just saying.

Anyone who owns land is a baron. However, it does not make them a robber-baron or a land-flipper. See the difference?

[Prokofy Neva]

Re: Now I follow the instructions at "Creating your own auction" and set the parcel for search, go to its Place Page, click "Auction This Parcel," fill in the fields, and click "Create Auction." According to that link, "when you create the auction, the ownership of the parcel is transferred to a temporary holding account named AuctionServices Linden" so now I should have 1024 of individual tier freed-up, which I use to "make good" on the group's overdrawn 10%.

OK, I had missed that part about the "holding service" -- that would take the land off your hands, but you'd have to look sharp to make sure that if no one bids on it and it doesn't sell and comes back to you, that you are not overtiered because it's not in a group.

I rarely sell land as an individual -- I put it in a group for land sales made only for that purpose with my alts, so that the sale distributes only to them and not tenants, and so that way I keep the 10% bonus on this.

When I tried this, it was "down" and kept giving errors so I will try again in awhile.

 

[Shaharazad Humphreys]

I'm having the same issue. My land is not group owned. When I try to create an auction I get the screen that says "error page: "Ooops!  An unexpected error seems to have occurred. Rest assured that developers are working hard to repair the issue. Please check back soon."

I submitted a ticket on Friday 3/29 but still no response. 

[Shaharazad Humphreys]

Update: So the Lindens say sorry, but they can't figure out why I can't create a resident auction. *sigh*  If anyone has had the same issue and found a fix please let me know.

[Qie Niangao]

@Shaharazad Humphreys, probably Support already had you try the easy things, but just in case: I'd make sure the problem persists using different browsers (e.g., both Chrome and Firefox), and with cache cleared (although if it doesn't help to switch browsers, clearing cache wouldn't help either).