2009 Real Estate Guide
A small modern looking home with a rooftop with foliage and trees on top of a set of house plans
real estate
14 questions to ask before auctioning home

6. Do I understand the auctioneer's marketing plan and sales strategy? One of the biggest mistakes that sellers make is not understanding the various strategies, Kravets says.

When you shop auctioneers, get a strategy proposal from each one. This proposal will include the details for marketing, advertising, showing the home and setting up on auction day. A key question: Where will the property be advertised?

A written proposal is important "so you can hold their feet to the fire," says Wells. "It's almost like a contract." You want a written document you can consider and study because "a lot gets lost in translation," he says.

7. Under what circumstances can I change my mind? Before you hire an auctioneer, pin down the specifics of what happens if you change your mind or if the house doesn't sell. What, if any, deadlines do you have? What fees would you shoulder? What if the bidding doesn't meet your reserve bid (the minimum price you'll accept for a sale)? What fees and costs would you still pay?

Before you sign, "read your terms and conditions," says Wells.

8. Am I protected if the sale doesn't go as I want? Do the math and think about potential loss and gain, says Kravets.

The auction is a discovery process. You're going to learn, in a few tense minutes, what someone is willing to pay for your house. Depending on the market, the bidders and the reasons they want the house, you may or may not be pleased with the answer. So you need to protect yourself, especially if you have a mortgage to cover.

One way: a reserve bid. This establishes, in advance, the rock bottom price you're willing to accept. The amount can be a secret or public. At an absolute auction, there is no reserve bid -- the home will be sold to the highest bidder.

While many auctioneers swear by the excitement an absolute auction can generate, others are more cautious. "I'm not a big fan of absolutes," says Bill Sheridan, president and CEO of Sheridan Realty and Auction Co., as well as chairman of the auction forum for the National Association of Realtors. A reserve bid will provide a comfort level for the seller.

A good auction company "will create a strategy to maximize the value and always protect the seller," says Kravets. If you need the home-sale proceeds to cover a mortgage, but your auctioneer is pushing an absolute auction, "you should be showing that person the door," he says.

9. Am I comfortable with my decision on a reserve bid vs. absolute auction? Some less-than-scrupulous auctioneers may tell sellers that they can advertise an absolute auction and opt for a reserve at the last minute. But that's a deceptive practice and is illegal in most states, Kravets says. It also infuriates potential buyers.

Instead, select an auction house that encourages you to take your time and reach a decision that makes you comfortable. While you want to solicit expert advice, be wary of anyone who seems to be pushing you into an absolute auction.


Show Bankrate's community sharing policy
          Connect with us

Timely market news and advice for consumers ready to buy, sell or invest in real estate. Delivered weekly.


Crissinda Ponder

Homeownership falls to level last seen during Beatlemania

The national homeownership rate is at its lowest level in 48 years, according to new data from the U.S. Census Bureau.  ... Read more

Partner Center

Connect with us