Why sellers may choose to go the Auction route,
In today's market, uncertainty is common for sellers and buyers. Sell now, try to hold on, or just walk away? Buyers are in the same boat, will home prices decline further, will my job hold out, will the interest rates decline further, and will there be more government incentive programs?
The "Days on Market" in my market is getting longer, coinciding with the end of the tax credit program. Inventory is going up and sales are slowing down. Homes with a normal price per square foot are lost to the repos with prices 20% - 50% lower. An Auction can make a home stand "Above the Crowd" with a short although intense advertising campaign.
An Auction is a call to action, once the promotion begins, the Auction can take place in 4-6 weeks. The seller knows their property will be sold on a certain date, with no post appraisals or inspections, no financial contingencies . An Auction avoids long drawn-out negotiations and the terms and conditions are set by the seller. Properties are usually sold with no inspections of any type and are always AS IS - WHERE IS.
Although an Auction will not work for every property, there is a great number that it is perfect for. Properties that have some equity are usually a good candidate for an auction.
Estates are the great example, many have several heirs that cannot agree on any price except one that is way high, and how can a listing agent ever get a property sold when there is so many different opinions?
Divorces, medical issues, relocation, life style changes, people moving to assisted living or to a nursing care facility are all reasons why sellers may choose to go the Auction route.
Another example; Consider a home with a PITI payment of 1,500.00, this home sitting on the market for 12 months, will cost the owner 18,000.00 to carry! Not to mention utilities, lawn maintenance and day to day expenses. When the scenario is put to then this way, many had rather bring a little to the closing table if necessary than to be bled out.
Realtors should use a reputable Auctioneer as a resource much the same as they would a Home Inspector, Title Company, Etc, not viewing them as a competitor, going to them first before a listing expires or when their sellers have urgencies, cursing them when they see the auction sign serves no one. I have had many sellers that I have sold homes for say, that they had even ask their agent about the possibility of an Auction, with no follow up from the agent.
Remember agents you represent your client and it is your duty to keep all options open to get their property SOLD!
"Anything sold at auction, will bring all it is worth that day".