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Why Select the Real Estate Auction Alternative

Author: Stephen J. Martin & Thomas E. Battle

house for sale by real estate auctionIt is the real estate, banking and legal professional's job to provide their clients and customers with the best service possible. Many times that will mean utilizing alternative marketing methods to sell clients' property. Increasingly, it means that the auction method will be used.

Today's economy requires the timely marketing of property before any of its equity value erodes. This is especially true with real property. The on-going costs associated with holding the property during the marketing period of a typical negotiated sale may be extensive and can significantly reduce the actual return to the seller. Such items as mortgage interest, taxes, insurance, maintenance, security, management fees and promotional expenses can all add up to a significant amount. We refer to such expenses as "holding costs" and owners are faced with such costs until the transfer of the property occurs. In some instances involving large properties, holding costs can extend to over 20% of the value of the property in each year. With the concern for financial security and high return, property owners are reviewing these expenses closer than ever before.

This is the cause of a paradigm shift in the minds of real estate professionals and investors toward accelerated marketing. In order to best determine when this exciting tool should be used, some of the finer points of the method must be understood.