An auction is a highly efficient and expeditious way to sell any type of real estate. The terms are straightforward and competitive bidding generates market value. Below are some key benefits our sellers enjoy.
Auction Benefits For Sellers
The auction method accelerates the process of selling property...
- The entire process, from the initial signing of the contract to the auction itself, can occur in as little as 30-45 days. The time span would be dictated by the desires of the seller as well as the amount of marketing that would be done.
- Conventional marketing could take months if not years in order to complete the sale of a particular property.
When the selling process is accelerated, the holding costs of the seller are markedly decreased...
- The National Association of Realtors estimates that the holding costs of property can often exceed 2% of the property’s value per month.
- Holding costs include, but are not limited to, principal, interest, taxes, insurance, maintenance/repair of the property prior to sale, utilities, as well as damages caused by vandalism of vacant property. These are just a few of the costs associated with holding onto a property longer than necessary.
The auction process of sales makes owning property a much more liquid investment...
- Morgan Stanley & Co., the global financial services firm, defines liquidity as the ease with which an asset can be turned into cash.
- Typically property is thought of as a low liquidity investment, due to the inability of the owner to transfer the property into cash for investment elsewhere. This is not the case when property is sold by auction.
The seller pays fewer costs in order to sell the property...
- In most auctions, the buyer, in the form of the buyer’s premium, pays most of the costs of an auction. The buyer’s premium is a percentage of the bid price which, when added to the bid price, determines the contract price of the property.
- In a conventional sale of property costs, are often part of the lengthy negotiation process.
The auction method takes the seller out of the negotiation process...
- Once the seller has determined the minimum price at which they are willing to sell their property, their involvement in the negotiation process is for the most part complete!
- In an auction the negotiating of the sale is between potential buyers who are bidding against each other, and thus increasing the final purchase price of the property.
Allows the seller to also include personal property to be sold at auction...
- This can include but not be limited to items such as: home furnishings, RV’s, equipment, vehicles, etc.
- Sale can take place on site, via internet, or at a third party location
The seller is able to have showings of the property based upon the seller’s schedule, not the buyer’s schedule...
- How many times has a seller had their schedule interrupted by last minute showings at dinnertime, weekends, etc.?
- With an auction sale, showings are scheduled based upon the needs and desires of the seller. They are usually done several days before the auction at times determined by the seller and not over a period of months at unscheduled and inopportune times.
The auction process allows the seller to receive fair market value for their property...
- The National Association of Realtors defines fair market value as the price that a ready, willing, and able buyer will pay assuming both parties are typically motivated, well informed, under no undue pressures, and possess all relevant facts. In addition, the federal government includes the following in their definition of fair market value:
- A reasonable time is allowed for exposure in the open market;
- Payment is made in terms of cash in U. S. dollars or in terms of financial arrangements comparable thereto; and
- The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
- How often does a conventional sale of real estate meet this definition? With an auction sale of real estate, the fair market value of real estate is immediately determined on the date of the auction.
Any contingencies are handled prior to the sale, not once the contract is signed as they are in conventional sales methods...
- With an auction sale of real estate there is no “subject to financing” clause in the contract. An auction is a cash sale with all buyers prequalified during the registration process and any deposits paid are nonrefundable under most circumstances.
- In an auction, real estate is sold “as is, where is” with any inspection or research done prior to the sale, not after. There is no such thing as a “subject to inspection” contingency after the auction that can sabotage the progress of the sale.
Auctions expand market reach for the seller...
- The promotion of seller’s real estate is what the makes the auction method of marketing so effective. By using signs, print media, electronic media, internet, and direct mail, the seller’s property can be exposed to a regional, national, or even international audience by itself, or at most with a few other properties.
By receiving maximum exposure sellers are able to achieve maximum value.
- No longer is the seller’s property lost in the weekend newspaper ad along with the hundreds of other listed properties. The seller’s property is highlighted and singled out for potential buyers to see.
A sense of urgency is created in order to entice buyers...
- Non-serious buyers are eliminated due to the pre-qualification requirement.
- Sellers no longer have to deal with real estate “tire kickers.”
Buyers come prepared to buy...
- As was mentioned earlier, an auctioned property is sold on a cash basis only with all contingencies dealt with prior to the sale, not after.
- Buyers are brought to a point of decision in a relatively short period of time.
The old adage, “You snooze, you lose”, certainly applies on auction day.
An auction creates competition among potential buyers...
- The auction brings all interested parties into one place at the same time for the same purpose- to determine who will pay the most for the property. Many times the sales price of an auctioned property can exceed the price of a negotiated sale.
- When two motivated buyers are bidding on the same property on auction day the seller is able to see ego meet desire, and it is truly exciting to watch!