In an insightful article in voiceofsandiego.org last year, Will Carless asked the question: Are Realtors Necessary?

This remains an important question with regards to the city’s land sales. Real estate is a high-stakes game where millions could be made from transactions involving public property. The Madigan-Nieto scandal is a grim reminder of brokers/developers willing to overstep their ethical limits.

Thus, in the public sector, the use of auctions is the preferred method of transaction since it eliminates perceptions of favoritism, and is the most efficient method of sale for properties that are not easily valued. Academic literature over the past decade (starting with Uwe Latacz-Lohmann and Carel Van der Hamsvoort on their work with the US Department of Agriculture in 1997) has established auctions to be generally superior to a posted-price offer system for providing low-cost solutions to the provision of environmental benefits.

The use of auctions to sell private real estate is also increasing rapidly in the eBay era. According to estimates of the National Association of Realtors, thirty percent of all real estate will be sold through auctions by 2010.

San Diego seems to be taking a step backward in time. The move to use private brokers in the city of San Diego got a jumpstart with a favorable Grand Jury finding:

using real estate brokerage techniques instead of a public auction the City would have greater latitude in disposing of surplus assets at the best price.

However, procedures of the Grand Jury investigation show that these recommendations were primarily based on interviews of the Mayor’s staff, the Mayor’s report and the Grubb & Ellis report (besides media coverage). No review of evidence on the effectiveness of public auctions, and no interviews with County officials that conduct these. Even as we are rushing forward to sell land, no cost-benefit analysis of internet auctions has been conducted by the City. And there is no way of measuring whether we actually raised more revenue by pursuing private brokers.

— MURTAZA BAXAMUSA

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