Selling real estate at auction works. Many people have the illusion that real estate auctions are last resorts. They are not. While we have sold many properties that could note be sold in other fashions, if the truth be known, the better the property the better auctions succeed.
After 44 years of selling publicly, I am confident that the auction method, when applied properly, frequently satisfies the demands of sellers in a manner superior to listing and waiting. It works particularly well during a period of active sales and limited listings.
No doubt that Absolute Auctions are far more successful than Reserve Type Auctions. An Absolute Auction normally attracts more competition than a Reserve Auction.
Recently, a property we sold brought over three times the expected amount. While this is not the norm, it does happen. Another property recently sold for more than 10% over the price previously accepted by the seller.
To the uninitiated, an Absolute Auction is one where there is no minimum or starting bid but may be sold subject to existing liens. A Reserve Auction is one where the seller reserves the right to reject the highest bid..
Public Auctions offer many advantages over.
Auctions allow the sellers to dictate the terms, if not the price. Real estate is generally sold as-is without the contingencies of property inspections.
The auction method allows the seller to set a specific time for viewing the property as opposed to disturbing the occupants frequently and at short notice. The property need only look its best at auction time.
When a seller commits to sell a Public Auction they are serious sellers as oppose to those who place high asking prices and hope for excess of sale prices. Auctions are a true measures of value as they one of the few instant applications of the economic principle of Supply and Demand.
Sellers benefit from the direct competition. Auctions separate the sincere buyers from the lookers. It brings about closure.
Even when the sale is not consummated on auction day, it normally leads to a successful sale as auctions help to find and demonstrate who may be interested. Many times we have sold property after an auction to be people who for one reason or another could not bid at the auction.
Some firms, like ours, Multiple Lists our auctions, offering participation and a share
When a reserve auction does not completely succeed is generally due to unrealistic demands or expectations. On occasion this may be due to in adequate marketing. Some investors or would be purchasers avoid reserve auctions because they are not convinced of the sellers sincerity. In many instances, the reserve auction is a better opportunity for a purchaser as it lacks the intense competition of an absolute auction.
Because auctions are normally non-contingent, few sales fold because the would be purchaser fails to acquire a mortgage. This is a result of the loss of deposit if one fails to close. This may eliminate the unqualified purchaser, however the requirement of a realistic deposit, not a $100 check, is a good measure of whether a would be purchaser has the means or can acquire it.
This need not deter purchasing at auction. We work with several lenders who are more than happy to pre-qualify a prospect. Often lenders send their representatives to the auction to help answer mortgage and finance questions.
Few things in this world are perfect and auction is not one. While selling at auction is an excellent method one should counsel with an expert as to the viability in their specific circumstance. An auction should be professionally planned, properly marketed and consummated. Experience and the credibility of the auctioneer are important factors.
Some sales may fail like private offerings when they do not receive personal or direct attentions from the auctioneer and the auction team.
For more answers or information on auctions, you may contact an auctioneer directly or have your real estate agent make arrangements. Some firms work with one firm while others work with all firms.
Multi-property auctions and large firms may appear to be exciting but as you know “too many cooks sometimes spoil the broth” and individual handling may be superior particularly when the listing agent is available to answer questions for prospects and participates in the auction sale.
My experience is that you cannot beat personal attention and involvement. If you are interested, why not attend an auction today. Every auction is a little different.