I am a salesperson by trade and am considering auctioning my own house. Can I run my own auction?
-- Judy K.
There are far too many potential complications for you to become your own auctioneer.
For one, you have to be a licensed auctioneer to conduct traditional public home auctions in many states and be bonded for $10,000 or more. There are also administrative and financial details to tend to, including determining buyer prequalifications. That brings up another point. In the scenario you suggest, you'd be the auctioneer and the seller, which creates legitimate conflict-of-interest questions.
Better leave this to the pros. With so many foreclosed homes up for auction these days, it's unlikely you would generate enough serious buying traffic without the marketing support that a major auction house brings to the table. Lesser auctions these days can attract some bidders, but many of them will only be bottom feeders.
The big benefit of a home auction, of course, is the quicker sale, although you should know that home auction fees can be anywhere from 7 percent to 9 percent of the home price, or higher than the average agent commission. Also, auctions work best in a strong market.
And there's more auction competition than you might realize now. In the current housing slump, many sellers, real estate agents and even home builders who would have never previously considered the auction route are putting homes on the auction block. That growth will likely supersede the current real estate cycle.
You may also need some professional guidance from an auction firm on market conditions and whether you should offer your house by reserve bid (the most common), minimum bid or absolute bid, where the seller will take the highest bid, whatever it may be.
You can, however, serve as your own auctioneer of sorts on several Internet sites that conduct eBay-style auctions, including eBay, of course, Yahoo and services such as RealtyBid.com. There are more "outs" available in this framework for skittish sellers and buyers because sales on these sites typically aren't legally binding. At the end of an Internet bid period, sellers and buyers usually meet to grind out a true real estate contract adhering to real estate laws in the seller's state. But before you go that route, study up on the process.
So put away your gavel and that copy of "Auctioneering Made Easy." I wish you a successful sale in whatever medium you use.