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Have you noticed that lately real estate auctions seem to be happening everywhere? You no doubt have your own opinion about auctions, and myths about this way of selling abound.
In a down market, where people are losing equity in their homes almost daily in some places, a real estate auction can sound like a scary, desperate last resort. Why on earth would anyone risk selling their home at auction. Yet, for some people, an auction can be the absolute answer to their prayers. And whether you are a sellers agent or a buyers agent, you will still earn a commission!
Types of Auctions
Most people are familiar with are the REO or bank owned auctions, where there are dozens or even hundreds of homes being sold at one time. The homes sold at these auctions are usually distressed in some way. Often, investors are buying houses sight-unseen – especially if they are bidding online. They are looking to buy for pennies on the dollar.
There is a night and day difference between an individual auction and a wholesale auction. First of all, the seller gets to choose the date of sale, which puts them in the driver’s seat. Then, an aggressive marketing campaign brings in motivated buyers who are prequalified to bid. Bidders come to the auction with cash, and compete to buy the property, which drives the sale price up. The result is that homes sold at individual auctions sell at fair market value, and close with no contingencies.”
Close the Sale with No Contingencies
Contingencies can strike fear into the heart of sellers and realtors alike, as they can derail a sale at the last minute. Many a seller has experienced approaching the closing date with anticipation and the feeling of a “done deal,” only to have the deal fall apart at the last minute. Perhaps the buyer’s financing does not come through, or maybe the buyer makes repair demands that are not feasible. Whatever the reason, it can be very discouraging. At this point, many sellers are ready to consider a Plan B.
What are the criteria and who should consider auction?
When considering auctioning a home, here are some things to think about.
· Does the seller have at least 25% equity in their home? If not, the auction way of selling is probably not the way to go.
· Are high carrying costs (mortgage, taxes, maintenance) becoming a burden?
· Is the property unique – mountain view, waterfront, is it exceptionally upgraded or landscaped? Special features like this excite people and encourage more competitive bidding.
· Is the seller planning to downsize, divorce or move out of state? They may want to consider the value of choosing the exact date of sale and moving on with their life.
· Is the property part of an estate that needs to be liquidated?
· Is the property vacant?
· Are you a developer needing to launch sales in a specific subdivision? A well orchestrated auction can not only sell certain properties, it can build viral awareness and interest in the community.
If you answered yes to one or more of these questions, you might consider making individual auction your first choice. Do your research to find your own comfort level with the process, and talk to at least a couple of well regarded auction firms before you make your final decision. Remember that in the the end, a well executed marketing campaign is at the center of every successful auction.
Do you know someone who needs to sell RIGHT NOW? An auction might be just what they need.
Karen Thomas
AJ Karas Auctioneers
For more information on auctions visit www.ajkaras.com
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