Selling a house at an auction has a very negative connotation to it. People feel it is a last and final effort to sell a home. There must be something wrong with it, that a realtor couldn’t find any buyers. Also for the realtor, it signals a loss of commission. It can be very frustrating dealing with upset sellers who don’t understand why you are unable to sell their house for them. You should take some comfort in the idea of auctions; the emerging trend to auction brand new homes in overly saturated areas as well as existing houses waiting to be sold may be changing those preconceived notions.
The National Association of Auctioneers quoted an eight and a half percent increase in real estate auctions from 2004 to 2005. That was a difference of nearly 14 billion dollars and most of the real estate auctioned was residental. It is also important to remember when interest rates rise, so will the number of foreclosures, which can impact these numbers.
How Auctions Work
You will be able to list a house for auction with confidence. There are typically three different types of auctions, and the rules will be well set before the auction begins. A common type of auction is called the reserve auction. When selling a house this way, the seller is able to review and either accept to decline an offer, within a specific and set timeline.
Another type of auction is the minimum bid auction. The seller is able to set their lowest acceptable offer prior to the auction beginning. As long as their minimum required price is met, the house will sell. Absolute auctions, or auctions without a reserve, will sell to the highest bidder, no matter what the final selling price happens to be.
Because buyers have the opportunity to see the house before bidding, this eliminates the waiting period following the auction for the potential buyer to secure financing or do a post purchase inspection.
Listing A Property For Auction Selling through an auction format can seem very simple. You should proceed with caution and educate yourself on the actual process. There are many rules and variations. You should spend some time learning the process by shadowing an agent who is familiar with the ins and outs of auctioning properties.
Putting together a presentation explaining the process and benefits of auctioning properties to attract clients. You can focus on auction companies and lending companies to build clientele and reputation.
Make sure you understand all the fine print and specifics in an auction. When you are working with an auctioneer, having all the details in writing should be a must. You need to understand your responsibilities, and you need to make sure you know what your auctioneer is responsible for.
Typically, the buyer will pay up to ten per cent of the sale price as the auction fee. A portion of that auction fee will be shared with the agents involved in the property. It is also worth noting, when you are at an auction to assist a buyer you need to remain very involved in the process. Help them make a bid and throughout the closing process. Many auctioneers require your presence and assistance before they will pay out a referral fee.
Why Auctions Work
Auctions can result in a quicker selling time. When you set the date for the auction, advertise and market the property, and close the sale following the auction, you can have a home sold as quickly as thirty days. Some sellers are either unwilling or unable to wait several months while you figure out the best way to attract sellers.
When you have a listing that is starting to get dated it can be increasingly difficult to find a buyer, even if you are lowering the price. Auctions are better known for getting a sale price that better reflects the current housing market. This means not only can your listing sell quickly, you could potentially receive a better selling price through auction.
If you are considering listing a property with an auction format, it is important to do your homework. Because auctioneers collect fees you will still be able to secure your commission for sold homes. This can be a major benefit if you have a frustrated seller who is considering selling on their own. You need to understand the entire process, and be willing to help your buyer as needed.