In this "whacky" market that distressed sales are creating, it is sometimes very challenging to sell a home in a timely fashion. Short sales, REOs, foreclosures and "normal" listings are all competing for a share of the shrinking "buyer pie".
If a homeowner has a substantial amount of equity and wants to sell a home quickly, a PUBLIC AUCTION is a viable way of marketing a property, create URGENCY and obtain the MAXIMUM price that the market will bear. Auctioned properties are normally sold "no-contingency, as-is, where-is", which means that sellers usually don't need to deal with contracts that fall through over and over because of buyer financing, nor they have to perform any repairs.
The only catch is that the success of an auction depends on competitive bidding from different interested bidders. If the auction fails to attract a significant number of qualified, interested buyers it is probably going to fail.
So - how do you attract a "significant number" of qualified and interested bidders? The answer, in this "soft" real estate market is simple. The ONLY auctions that WORK are:
- ABSOLUTE AUCTIONS - where the property is guaranteed to be sold the day of the auction to the HIGHEST BIDDER - REGARDLESS OF THE AMOUNT OF THE BID. This potential "bargain opportunity" normally attracts many bargain-hunters banking on paying cents on the dollar, creates a competitive bidding environment and normally pushes the price up (sometimes even beyond "perceived market" price). The risk to the seller is controlled by monitoring the amount of registered, qualified buyers BEFORE the auction. If this number is not conducive to a competitive bidding situation, the auction can be PULLED OFF at the last minute to avoid disaster. Absolute auctions cannot be performed if the seller has a mortgage on the property, unless the LIEN HOLDER pre-approves it.
- DISCLOSED RESERVE (i.e. "minimum acceptable price") AUCTIONS - only work well when the disclosed reserve is a VERY ATTRACTIVE number (i.e. "half-price"). Again, this attracts bargain-hunters and stimulates competitive bidding which normally pushes the price up to a "market" price. For these auctions to work, the seller must either own the property outright, or owe an amount lower than the disclosed reserve. If the reserve amount is not reached at bidding, the property is not sold. Once the reserve is reached, it becomes ABSOLUTE - it will be sold to the highest bidder.
Most auctions normally work with pre-qualified, pre-registered bidders. The winning bidder normally needs to pay a 10% deposit the day of the auction, and the balance in 30 days.
The good thing about auctions is that it only takes 4-6 weeks to find out the outcome. If the property is not sold at auction, the seller always has the option of offering it for sale as a "traditional" MLS listing, without becoming "stale" by virtue of waiting for months for an offer...
LOWCOUNTRY HOME AUCTIONS, LLC is a company that provides auction marketing services to home sellers, agents and institutions needing to sell homes in South Carolina. If you have any questions or wish to receive a proposal to sell your SC property, please send us an email with your contact information.