Once you’ve decided to sell your house, you likely have two main goals. First, you want to complete the sale as quickly as possible and secondly, you want to realize your desired price. Some sellers are lucky enough to make this happen by listing their homes on the open market.
When time is of the essence, you should examine the benefits of private sale vs auction. What are the pros and cons of selling at auction?
Advantages of Auctions
The biggest advantage of selling your home through an auction is speed. There are many reasons an owner wants to sell a home quickly. It could be due to a job transfer, a change in career circumstances, or disposing of the home of a loved one. In each of these instances, owners may be motivated to try to sell the home quickly.
Without having to list the home and hold a seemingly endless series of open houses, and showings it can be far quicker to sell a home at auction.
Reserve Price
Your reserve price stays strictly between yourself and your agent. By setting a reserve price, you ensure that you are getting the minimum amount that you feel is justified by the house and its condition, location and other variables.
Your auctioneer will do an appraisal on the home and combine that with additional research into similar sales within the area to determine their estimated market value. This is similar to what a traditional real estate agent would do. Consulting a real estate attorney can help you with the legal details of the auction.
Competition
The bigger the group of bidders the higher the interest of the buyers will be. Promoting competition amongst bidders is one of the skills of the auctioneer. Buyers don’t want to “miss out” on a good deal and often bid higher than what they would consider in a listed sale set-up.
Urgency
There is a specific sale date. This encourages bidders to make a decision as to whether or not they want to bid on your property. Without a hard date prompting a potential buyer, they can be tempted to put things off and procrastinate
Contact with Buyers
If your property does not sell at auction, you or your agent can contact them. There is still a chance to consummate a sale. The potential buyer was interested enough to place a bid on your home. You can try to negotiate a price that is close to your reserve price at auction.
Choosing Your Auctioneer
Most states require auctioneer accreditation to conduct an auction of property, land or livestock. The auctioneer is also required to hold a Class 1 or Class 2 real estate agent license.
This serves to protect you the seller from unprofessional or unethical auction houses.
Have a discussion with your auction agent up-front to determine what commissions and fees are. Once you agree on these terms have them incorporated into the contract you sign with the auctioneer.
Working with reputable professional real estate agents, auctioneers, and attorneys will ensure you get the result you want when selling your home.
