can be best way to sell your home
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?
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
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
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.
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