New Visitors Privacy Policy Sponsorship Contact Us Media
Baby Boomers Family Green Home and Auto In Critical Condition Just Starting Out Lifestyle Money
- advertisement -
Bankrate.com
News & Advice Compare Rates Calculators
Rate Alerts  |  Glossary  |  Help
Mortgage Home
Equity
Auto CDs &
Investments
Retirement Checking &
Savings
Credit
Cards
Debt
Management
College
Finance
Taxes Personal
Finance

Steve McLinden, the Bankrate.com Real Estate AdviserAuction can be best way to sell your home

Dear Real Estate Adviser,
How do we get started with the process of auctioning our home? I have already gotten it appraised. What does the auction process involve, and how well does it work?
-- Joyce

- advertisement -

Dear Joyce,
Depending on your situation, an auction may be the best way to move a house quickly without giving up an enormous price break.

Presently, a little less than 1 percent of all home sales in the U.S. are conducted by auction, according to data from the National Auctioneers Association and the National Association of Realtors, although that number is destined to rise steadily, their findings indicate. Obviously, the old notion that an auction is a desperate last resort for selling a home is slowly vanishing. In fact, auctions have spread rapidly to a variety of parcels, price points and precincts.

There are several options for auctioning your home. If you're averse to a fast-talking, gavel-wielding guy standing on your front lawn bellowing "Gimme hunnerd-fiddy-five -- fiddy-five -- fiddy-five," you can go the route of the sealed bid. There's also a minimum-bid auction that sets a starting point somewhere in the ballpark of what you want for the house. A reservation auction, on the other hand, gives you the right to reject or accept the highest bid during a set period that's usually three days. A dual-bid auction solicits sealed offers that establish a high bid for an open auction that will follow.

Auctioneers, however, most like the traditional "absolute auction" -- with the property guaranteed to be sold to the highest bidder -- because it is more conducive to whipping up a bidding frenzy.

Make sure you express all your needs and concerns to the auction companies you interview. Settle on one that has a long-term proven track record, dozens of current references and an extensive buyer database. Finding the right auction company might well be the most important move you make in the whole process.

One of the big pluses in the home-auction process is its sheer speed. It can take a month or less, which is roughly the amount of time it takes the auction house to market the property and organize the event. Also, you won't have to contend with multiple showings that span several months or constantly worry about keeping the house in immaculate "show shape." Usually, there are a couple of weekend showings prior to an auction and poof, you're done.

Additionally, an auction allows you to sell the place with no improvements or other contingencies required of you and with little or no negotiation. There's also a set date for the sale, and there's no worry that the buyer may not qualify, because auction firms require that bidders must first show proof of secured funding.

Potential negatives: Sometimes a too-high minimum bid price will chase away potential bidders. Additionally, auction houses require a marketing fee in advance, and it is generally not refundable, sale or no sale. Those fees, plus the auctioneer's commission, generally add up to a sum that is equivalent to, though sometimes less than, the amount you would have paid an agent selling it the traditional way. To increase their inventory of for-auction homes, some auctioneers will agree to collecting a commission from the buyer in the form of what's called a "buyer's premium" that is disclosed in advance of the auction. This means, in addition to the bid price the buyer will pay a premium -- often 5 percent to 10 percent -- over and above the bid price. Read your contract with the auctioneer carefully to make sure both you and the buyer are not paying the auctioneer's fee.

Auctions on eBay and other Web sites meet with varying degrees of success and often feature fixer-uppers that are being sold sight unseen (and "site unseen" except for photos) for a relative song. These are still a little iffy. If you consider selling your home that way, a seven-day auction ending on a Saturday or Sunday with a minimum bid seems to work best, but you should avoid holiday weeks and weekends.

There is one overriding caveat in the auction process that prevails in much of the U.S., currently: a buyer's market. Auctions tend to work best when there is a strong seller's market and potential homeowners and investors are pitted against once another driving up the price. If your market is slow, you may have to drop your minimum price a little lower than you'd like.

Depending on your situation and market profile, an auction might just be the ticket for a quick sale with a minimum of hassle and paperwork.

I hope it works for you.

To ask a question of the Real Estate Adviser, go to the "Ask the Experts" page, and select "buying, selling a home" as the topic.

Bankrate.com's corrections policy -- Posted: Aug. 12, 2006
Read more Real Estate adviser columnsAsk a question
 RESOURCES
When a home auction is appropriate
Best bet when changing homes? Sell first
Selling solo? Here's how to do it right
 TOP REAL ESTATE STORIES
How to lower your property taxes
Forged signature puts kibosh on home sale
Will mortgage assumption solve crisis?


Mortgages
Compare today's rates
NATIONAL OVERNIGHT AVERAGES
30 yr fixed mtg 3.99%
15 yr fixed mtg 3.06%
5/1 ARM 3.20%
Rates may include points
RELATED CALCULATORS
  Calculate your monthly payment  
  How much house can you afford?  
  Fixed or adjustable rate: Which is right for you?  
VIEW ALL  
FINANCIAL LITERACY
Rev up your portfolio
with these tips and tricks.
- advertisement -
- advertisement -

About Bankrate | Privacy Policy/Your California Privacy Rights | Online Media Kit | Partnerships | Investor Relations | Press Room | Contact Us | Sitemap
NYSE: RATE | RSS Feeds |

* Mortgage rate may include points. See rate tables for details. Click here.
* To see the definition of overnight averages click here.

Bankrate.com ®, Copyright © 2014 Bankrate, Inc., All Rights Reserved, Terms of Use.