Key elements make a successful real estate auction
By Richard Bronstein
There has been much commentary written about the viability of selling real estate at auction.
While there have been a few significant property auctions that would not be considered successful, in general, professionally conducted real estate auctions accomplish what they are intended to achieve – prompt, punctual sales at the seller’s terms.
There are several elements that allow you to maximize the results of public auction. Other than the element of luck – good or bad – which should not be ruled out, they include some of the following:
◦ Integrity – The auction firm should be known for a reputation of consistent, honest business relations with both purchasers and sellers. Auctioneers who lack credibility have difficulty generating trust and obtaining bids on large and even less significant properties.
◦ Planning – Auctions, though often informal, should not be haphazard. There should be standard steps and processing. Timing, promotion, terms, media and the like should be determined well in advance.
◦ Marketing and promotion – Advertising should be keenly targeted toward the most likely markets, emphasizing the property to be sold rather than the vendor. Advertising should be direct and factual. Misleading and self-laudatory marketing is the cause for many of the few auction failures.
While targeted advertising is preferable, it is also important to cover a wider band where properties offer multiple opportunities. Use of many media is preferable to overloading expenditures in one. Local papers, trade papers, Multiple Listing Services, the internet, and signs should all be considered. Avoid charging for information packets; if you must, be consistent.
◦ Terms of sale – Real estate should be offered for sale with clear, understandable terms of sale. Convoluted and highly technical terms are self-defeating.
◦Broker participation – Other real estate brokers should be encouraged to bring clients and attempt to motivate their clients to bid. This helps to increase competition and therefore increases the ultimate price.
On the other hand, one might do well using a firm that lists the auctions in the Multiple Listing Service.
◦ Experience and training – Like in any field, practice makes perfect. Why pay for training a neophyte? A true professional usually will increase your yield substantially and take advantage of the many benefits selling at auction offers.
◦Performance – Past results and “team” effort will help ensure that you select the right auctioneer.
◦Gimmickry – Giveaways and brass bands may attract crowds; however, for the most part they only cause confusion and take the spotlight away from the property to be sold.
◦ Reputation – The past performance of the auctioneer, and the property as well, may pose to be assets or liabilities. Auctioneers who purchase or collaborate in the acquisition of bargains leave little to motivate auction attendance.
◦ Consistency – Avoid changing horses in mid-stream. Do not change terms without advance notice. Disseminate unusual terms and changes freely rather than to a privileged few.
Should you be considering an auction or wish to “pick the day you sell,” discuss it with a professional auctioneer. It is also an excellent idea to attend similar auction sales.