Need to sell a condo quickly? Try an auction
"We require that the sellers make a portion of
them absolute," Elms says. "Because buyers of high-end
condos are smart and discretionary. They know the difference between
absolute and reserve, and you have to give them an opportunity to
get a property for a good price. The whole basis of a successful
sale is competitive bidding, and for that you've got to have a good
crowd of qualified people."
Since an auction is a one-shot deal, marketing it
is crucial. "We know a property is going to be sold 30 to 45
days from the day we list it," says Tommy Williams of Williams
& Williams in Tulsa, Okla. "Therefore, we are going to
spend a very serious amount of money to bring the public's attention
to it in plenty of time."
Williams, who says he's been selling all kinds of real estate at auction for more than 30 years, estimated the cost to market a property at about 2 percent of its value. ''We use just about every advertising vehicle that makes sense for a given property," he says, "from direct mail and signage to media exposure."
Says Elms, "Once we sign a contract, we have
a preparation period of about six weeks. So the seller has to be
willing to participate, and step up to the plate with pictures,
floor drawings and site plans. The thing that makes an auction work
is generating a sense of urgency -- and part of that is created
by promoting it in a very limited time frame."
Charges for such services vary and are determined
in several ways. Williams & Williams works on straight commission,
with the percentage determined by the size and type of property.
In addition to a commission, Christenson-Elms also charges an upfront
marketing fee, refunding any amount that's not used. Other firms,
such as Grand Estates, also charge buyers a premium to help cover
marketing costs. Auction commissions and fees can often exceed 10
percent of the home's value, according to a Wall Sreet Journal report.
The buyer's burden
Because auctions are fast-paced, competitive events, Elms says, "buyers can get caught up in the hoopla. So they need to do their homework and come prepared."
Bidders must present a cashier's check in order to qualify for a given auction, she says, and the winning bidder has to put down 10 percent of the price in hard cash on the day of sale.
"That is nonrefundable," Elms says. "But
we've never had anyone rescind."
Christenson-Elms prepares property information packages and sends them to prospective buyers in advance of the big day. "On auction day, we tell people, 'You should have read it -- and if you didn't, don't bid.'"
"We understand that auctions are not something
that everybody is familiar with," says Kirk, who set up the
Cheesman Park condo auction in Denver. "So we want to provide
buyers with all the information they need, because the process does
happen very quickly.
"Prospective buyers can see what the property
was listed for and ask for a current appraisal and a home-inspection
report paid for by the seller that shows its condition. We also
open up the property for a preview so that people can come by and
inspect it. They can bring their family, financial consultants,
decorators or whoever they need to bring in order to make an informed