Author: Stephen J. Martin & Thomas E. Battle
It 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.