Why Sell Real Estate by Auction?
Fall is in the air, and while some suggest a young heart turns to love, we also know this is a time when many experience major transitions in life ... children off to college, starting new jobs, or getting married among them. These life changes often lead to the need to sell your home or liquidating property to cover the cost of college, moving, or the perfect wedding celebration.
Traditionally, there are two methods to sell a property; For Sale by Owner (FSBO), or with the assistance of a realtor. An additional successful method that is often overlooked in our area is to sell your property by auction.
In years past, many people looked at the auction method for real estate as an indicator of a distressed or bank owned property only, and the auction was a quick and easy means of transferring ownership. This is a misconception and clearly not the only reason to sell your property at auction. In fact, in some areas, the auction method is the most recognized and accepted way to sell property including, traditional and non-traditional homes of all values from a starter home to multi-million dollar properties, as well as large land tracts and commercial properties.
We are fortunate to have many excellent realtors in our area. Not all situations are best served by the traditional method of selling, the same way not all situations are best served by the auction method. For this reason, it is important for sellers to be informed of their options.
There are many reasons why a seller would want to consider the auction method to sell their home, land or commercial property.
An auction builds competition. With the public outcry (on-site, live) auction, the competition gains momentum as the bidders are fully engaged and the price continues to rise. With an on-line auction (or simulcast, whereby the live auction is happening in conjunction with the on-line auction), bidders can see the numbers escalating as the auction continues.
An auction removes the cap limits. In a traditional real estate sale, the cap is already in place by assigning an asking price, with the expectation that the price will often go down during negotiations between the buyer and seller, either by the seller directly in a FSBO situation, or facilitated by the realtor or realtors in a traditional transaction. With an auction, this cap is removed and the true value of the property is determined by the bidders vying for the property. An Auctioneer may start at a lower price and by incremental bids, the price continues to rise until all bidders have indicated their top bid. This partnered with the competition will set a solid true value on the property, often exceeding what may have been an original asking price.
An auction is generally less disruptive to the seller. Anyone who has offered their property for sale while they are still residing in the home knows that continual showings of the property can be disruptive. Auction properties usually have a pre-determined preview time where interested parties can talk with the Auctioneer and look at the property. This is often one time in the weeks leading up to the sale, then right before the sale takes place. This process can be less disruptive to the seller, while offering the opportunity for the buyer to get all questions answered about the property.
An auction sets a predetermined closing date to provide better planning for the seller and buyer. The auction will take place on a pre-determined date. The terms and conditions of the sale, as set forth by the Auctioneer and widely publicized, indicate the sale date, as well as the closing date (generally 30-45 days from the sale date).
An auction property is sold “As is, Where is”, removing the seller from the negotiation process over inspection items. There are no contingencies for the property to sell. Once the Auctioneer proclaims the bidder successful, a deposit is made and the transaction continues to close. Since this is the understanding from the beginning of the sale, buyers know to take a close look at the property and be satisfied before bidding.
The terms and conditions of any auction property are very important. For sellers, make sure you know why the Auctioneer has them in place for your benefit. For the buyer, make sure you read the information thoroughly and ask all questions before placing your contractual bid.
F. Scott Fitzgerald wrote, "Life begins all over again when it gets crisp in the fall." This seems like an appropriate thought this time of year in Pennsylvania. Whether your young heart is turning to the adventure of children off to college, exploring new possibilities, or entering a new realtionship, as you contemplate selling your property to fufill your new dreams, consider the auction method as a viable option to get your property SOLD!