Auction Monopoly and Rising Land Cost

Has anyone else noticed the auction monopoly in SL? take a look at all the completed auctions and you will see maybe one or two people winning all the auctions. As it stands, very few people have a chance in the auctions against these monopolists who suck up all the land they can get, and become the only main suppliers of land from auction.
This monopoly of auctions make them able to charge whatever they want for land, as no one else can get the land any cheaper than what they paid for it. You all should nitice that in the newer sims, land prices are moving over L$8 a Square Meter! I think there should a limit to how much land someone can win on auction in a given month. We need to keep the auctions free for everyone to have a fightnig chance against these land giants. I personally don't think it is fair to the community. Go watch some auctions and see for yourself who is doing all this.


"Down with the corporate world!"

Don't expect much support for this concept.

I think the point of land auctions is that *you* get to decide how much a plot of land is worth. If your valuation is higher than that of anybody else, you'll win the auction. If not, then you won't. *You* may not think a particular plot of land is worth L$8/m^2, but *someone* does, and that's why it sold for that price.

Now, having said that, I *do* think that a small group of individuals having too much control over *any* scarce resource is bad, as it tends to break the market and skew valuations. Auctions, however, can be won by anyone who feels committed to making a purchase. The price you pay just depends on how badly you want the land. The name of the game is priorities.

What Ricky said plus...

You can win auctions. I've never lost an auction I 'wanted' to win. But I put my money where my mouth is. However sometimes I pay more than what its worth. But to me thats fine because its fun to me and I dont do it on a huge scale like others.

But there is a very small set of people, very small, that you will see bid on just about EVERY auction. And they dont win everytime, but they do bid, up to a point. They sit down at come up with an amount they want to pay and they play the auction until the price is above that amount. Some would argue that a few of the major land resellers play in alot of the auctions simply to keep the land prices inflated artifically. Im still debating that myself. But it is in the best interests of large land resellers to keep the prices high. Because if they dont keep the auction prices up, some small time reseller might just get a great deal on some land and then go into direct competition with them at much lower rates. I wouldnt whine about that practise too much because any land reseller that plays the auction market that way does take a risk of acquiring a piece of property should they win. Its smart and good business and I dont blame the ones that have invested alot of time and money to keep the market at a level for them to survive.

Games,

out of the last 37 closed auctions there were 18 unique buyers. You were one of them.

Do you really believe, Chris, that one person or a group of people could overpay at auction on a significant enough portion of the land sales to artificially inflate the prices in game on a regular basis? You have to remember, beyond just the auctions there is a LOT of in world land that can be sold at any time by lots of different people. If the prices were artificially inflated by a small group that was literally paying more than they should for what they were getting then these other people would take advangtage of that. I think if you tried this 'strategy' you'd quickly find yourself out of a job and broke with a lot of land at your disposal. The market doesn't have to be at any 'level' for them to survive, because its a matter of buying low / selling higher not getting it for X and selling for Y; no matter what the price of land is at the moment a land baron will always be able to profit more than those below them in tier just due to scale and lower fees that allow for a lower profit margin above cost without overbidding. In fact, I would be willing to go so far as to say that in general land barons bid well below the true "market value" of the moment, cutting in right above what most people are 'willing' to pay, yet below what they would otherwise get it for In-World.

Do you believe that one person or a group of people could overpay at auction on a significant enough portion of the land sales to artificially inflate the prices in game on a regular basis? You have to remember, beyond just the auctions there is a LOT of in world land that can be sold at any time by lots of different people. If the prices were artificially inflated by a small group that was literally paying more than they should for what they were getting then these other people would take advangtage of that. I think if you tried this 'strategy' you'd quickly find yourself out of a job and broke with a lot of land at your disposal. The market doesn't have to be at any 'level' for them to survive, because its a matter of buying low / selling higher not getting it for X and selling for Y; no matter what the price of land is at the moment a land baron will always be able to profit more than those below them in tier just due to scale and lower fees that allow for a lower profit margin above cost without overbidding. In fact, I would be willing to go so far as to say that in general land barons bid well below the true "market value" of the moment, cutting in right above what most people are 'willing' to pay, yet below what they would otherwise get it for In-World.

I think you are misunderstanding my point. I've seen ALOT of auctions where the final price was determined by only two people. Meaning the final 50% or more of the price was determined by two people (ie most of the bidding was between 2 people). And most of the time you will find that one of those two people are bidding in almost every auction. And thats what I am wondering, if this one person wasnt bidding against alot of others in almost every auction, how different would the final price be on almost all the auctions? And thats my point, is this one person keeping the prices at a certain level. And remember, as you pointed out, auctions arent the only place land is bought and sold, BUT it is the basis where the land reseller determines the resell price. And when the land is resold, and the new owner decides to sell, they use that purchase price they paid as a bearing on what they will try to sell for. So that final auction price does have a lasting impact on the price of land. But yes there are other factors, like island sales/rentals, affect the market.

Ultimately it is almost impossible to make consistant profit by selling higher than everyone else. The only way to increase profits is by buying cheaper.

But it is also in your best interest to keep the markets at a higher rate to help reduce the amount of loss you might incur from higher priced land you've already paid for.

I don't think anyone is *inflating* land prices. All land is different; size, facilites, accessibility, outlook, terrain, climate, etc.
All these factors make a huge difference to the land's saleability, for those buying to sell on; or it's desirability, for those buying it for their own use.

Those buying for their own use will pay virtually any price, up to their personal financial limit, that it takes to win an auction.

Those buying to resell will have a set of parameters which they use to determine the potential profit margin the land represents. They will have a strict purchase price limit in mind which they will adhere to.

Of course if you go into an auction with an unrealistic idea of the likely value a reseller will put on the land in question, then you *will* fail. But I can assure you that no one who is going into an auction with the intention of selling the land on will pay more than the land is actually going to fetch on the open market, plus of course, a profit margin.

Anyone who really thinks this is not the case should follow a few auctions and then keep track of the eventual fate of the land. You *will* find that it is sold on at a price greater than it fetched at auction.

In fact the land at auction is, if anything undervalued - it represents the cheapest land in SL, other than first land.

ROFL

Good job Champie!

Study what their final price is on a plot that was won. Most of the time they wont breach the price they think they can resell it for. The last time I was in an auction, I studied the prices that were being paid and set a price on my bid I felt would win the plot.

Sure enough, I won a 4096m for L$16000, just under L$4 per meter. About 80% of the sim around me was instantly set up for resale at L$6 and L$7 per meter.

It can be rough, but the land is there waiting to bid on. If you declare defeat without even trying, you just might find yourself buying land from the auction that got away.

Our group has had success in getting the plots we want, sometimes only spending $5 more than Anshe Chung or Blue Burke bid, but sometimes having to spend quite a bit more.

The solution to the problem of monopolization is to provide more competition, not ask for restrictions. More people should be encouraged to bid, especially in organized groups where they pool tier.

Some barons haven't been coming on the auction as much lately, because they can't get their land already in-world sold, the market has been flat in some areas though still brisk in areas like prime waterfront and telehub.

More wannabee middling-level barons and smaller fry barons have come on the scene but the drop in the GOM, the glut of land on the new continent, the patch problems forced them off the auction, and that's why in this particular time slice of 30 days, you're seeing more of the oldtime classic big barons.

Yes champie, I was one of them. I managed to win one 1/4 sim plot against anshe chung that I wanted, but at a very high price. as you will also see, I don't bid on every single auction like some of the people you see in there. I am just saying that because of these people biding on EVERY AUCTION, they inflate the US$ prices well over $200, and the final auction price affects the rest of the people in game. Like is stated earlier in this thread, the auctions have a direct impact on in world sales because it sets the base price for that land. Auction is where you find all your large plots that make up about 80% of all land sales in SL. when those prices rise, the economy suffers! Wonder why land is selling slowly nowadays? when you are paying over 8K for a 1024 plot, how many people in world can afford that? only established store owners, builders, and scripters. your average character just can't afford it, and therefore it drives up rentals, and land sales suffer. I would like to remind you that I want EVERYONE to have a fair shot in world to buy land at fair prices without the price being jacked up from auction hogs.

I think your barking up the wrong tree.

If you have a problem with land prices you should take it up with the Lindens, not your fellow players.

It is their system after all.

Keep in mind that when someone bids on an auction, they're not trying to inflate the price -- they're trying to win the auction. They will place a maximum bid (based on their perception of what the plot is worth), and the price will move until their maximum is reached. If they have placed a higher value on the land than you, they will win the auction.

I believe this perception comes from viewing auction bid history after the fact. Nobody know a priori what another bidder's max bid is, and when viewed all at once, it may look as though a particular bidder is simply trying to inflate auction prices while they're actually trying to win, and got outbid.

Youknow there's one simple solution to your "problem", open your wallet bid on all auctions, make sure you win them all, if someone bids L$64 a sq make it 200 a sq and be the monopolist.

Wow i din't know it was that easy to get rich (read poor)

Once again I have to remind everyone what the argument is about here. I am not complaining about people winning auctions for personal land. I am complaining about those people who who become our main suppliers of land from auction. They buy land with the soul intent to resell to the public. Please listen as I reitterate what happens when land prices get too high. We see it now, as land is getting very expensive to the point where not many people can afford it. The less people who can buy land, the more sluggish the market for land. That means many homeless people in SL. I hope you all can undrestand the point I am trying to make here.

You aren't really *making* a point.

Homeless people can buy first land, or take advantage of Anshe's 'generous' offer to them, if they want a little more space.

For the rest - and I was 'homeless' until recently - you get to pay the auction price . I outbid Anshe and got 9968 of prine waterfront for about half market price.

Where is the problem?

So I sell on a chunk and reinvest the profit in more land. That's what makes the world go round my friend - work and earn, or invest and speculate - your choice.

I think your problem may be that what you really want is *free* land - no investment, no risk.

Well it doesn't work like that I'm afraid, not in RL, not in SL...

Things I have seen Games; No one wants reduced land prices, Whole Sale Auction buyers dont-they need market cost plus overhead matching for resale. You and I dont, we want our homesteads worth there max resale value.

If what you say holds merit of land pricing soring and less people wanting to make that out of pocket land sale.

think of this angle; (1)Keep and make Land more costly (2) Create a complete and devirce Renters Market (3) Have most player moneys dry up, ie traffic..ratings..event...stipens.

Land Barons are migrating to a Renters market - They Keep the Land, They control the Land, They Benefit from ALL the Land can give.

Bottem Line- I Feel the goal of the controling Parties here is to pull the most Dollars out of the players pockets and put into the game.

So I ask- If this has any merit------- WHO Benefits ?

Purchase caps on the auctions are an excellent start for harpooning out-of-control resale prices. But the uproar from the poor little rich barons would rupture your eardrums.

Were such a thing possible, I'd structure it like this: seperate land auctions into two parts, big and small (set the division at an eighth or quarter sim or so). Anybody who bids in the big auction can't bid in the small auction for 30 days. About half the land is sold in the big auction and half in the small. That removes to a large extent the barriers to market entry that keep land auctions the sole province of the RL rich.

Of course the barons have much greater influence over the game than those of us who merely play it, so changes to benefit players of modest means are extremely unlikely unless they're funneled through profiteering middlemen. So it goes.

Auctions are pretty much the only way to get a selection of really large chunks of land, like 1/4 or 1/2 sim or even more. Also, land in new sims seems to sell faster and for more money than old sims. I think this is because it looks so grand before anything gets built on it. For those reasons land barons are attracted to the auctions.

If you want cheap land, search in-world. Go back every day and look. Its a lot of work, but it pays off. If you want 2048, look for 1024 anyway, because often you can find two 1024 next to each other for similar price, buy both and join them.

Prices are high on the auctions mainly because printine new land is worth more.

Buster

Thank you Arcadia! Finally someone who understands what this is about. It is the RL rich controling the game, and I think your idea for 2 seperate auctions would be great. Not that it would happen. It seems to me that the lindens almost try to encourage this increase, as they make tons of money off the auctions. But thank you for seeing what I am trying to say. I don't want cheaper land, or anything for myself. That is not the point of this thread. the point is that RL rich are controling the game, and its not fair to the rest of the players who can't spend hundreds of dollars US$ or thousands of dollars L$ to get a piece of land. and to those people who try to make a living off the game by stepping on everyone else to make a buck.... get a real life before you start a second one, and realize this is in fact a GAME! Have fun!

The RL rich do not control the game. Are you telling me that the only people that build anything are rich? What about the people that script? Or the ones that hold events? There are many people that have made a good deal of money just within SL. They used no outside money, but yet they have contributed greatly to SL. The land market is controlled only to the extent that the players let it be controlled. If more people bought land in auction, or people were not willing to pay the price that they pay for the land, the market place would change. Being a free market economy, any controls would ruin SL as you know it. You start controlling one part of the economy, where do you stop?