How to sell real estate (or anything) using an auctioneer
There are many misconceptions about the auction process whether you are a buyer or a seller. Auctions have existed for over 2,000 years and the auction method is the truest form of price discovery. The competitive bidding of an auction determines the market value of any asset.
Auctions generate excitement and allow interested buyers the opportunity to gather and tell the auctioneer how much they are willing to pay for an asset. It is for this very reason that many “priceless” items such as works of art are only sold at auction. Competitive bidding of an auction determines the market value and establishes the highest price a consumer is willing to pay. No More. No Less.
Here are a few advantages to using a professional auctioneer to liquidate your asset:
• The auction team coordinates the auction, prepares the assets for sale and appraises their value.
• Auctions are professionally marketed locally, nationally and internationally.
• Auctioneers utilize technology to increase bidder participation.
• Auctioneers create a competitive atmosphere among bidders achieving the market value for the assets they are charged with selling.
• Buyers come to auctions to find unique items and compete against other interested buyers.
• More than a quarter trillion dollars are sold at auction every year in the United States. This doesn’t include items sold on eBay and other online auction websites.
Despite the advantages of using the auction method of marketing, you may still be questioning whether this is the right method for you. If so consider the following points:
SPEED OF PROCESS
• The process to liquidate an asset can happen very quickly with the auction method. Depending on the asset many auctions are sold in less than 30 days from the date of the contract.
EFFICIENCY OF PROCESS
• Auctions are very efficient. As the seller you have the auctioneer marketing and cataloging all of your assets. If you are selling personal property, an auctioneer can sell in one day what may have taken you months to sort and liquidate.
TRANSPARENCY OF PROCESS
• There is no question of what someone is willing to pay at an auction. Negotiations always work upward at auctions and when everyone has stopped bidding the highest market value has been established.
• Consumers can set their own price
• You don’t have to worry about negotiating your price as a buyer at an auction. You only pay what you are willing to pay.
TERMS TO UNDERSTAND
Here are a few auction terms to understand before buying or selling at auction:
• Absolute: Property is sold to the highest bidder, regardless of price.
• Minimum Bid Auction: Bids are accepted at or above an advertised minimum price.
• Reserve: Seller has the right to accept or reject any offer that falls below a confidential reserve price.
Here are a few things to consider when thinking of selling real estate at auction:
• Auctions are no longer considered last resort or discount sales for selling real estate in today’s marketplace.
• Auctions are quickly becoming the first, best and only choice in many of today’s real estate markets.
• The National Association of Realtors (NAR) approves of auctions and considers them a viable sales and purchase option.
• “Auction Fever” continues to grow as consumers continue to demand products quickly and for the price they wish to pay, win or lose. Auctions provide them with that option.
• Auctions provide a quick turnaround, usually 30-45 days
• Auctions are the ultimate price discovery mechanism
• Auctions create excitement
• Auctions are time definite — you, as the seller, set the date and time for someone to bid on your property
• No contingencies or warranties
• Comparable commissions
• Aggressive marketing and advertising
• Forces buyers to be decisive.
IF YOU GO TO AN AUCTION:
When attending an auction as a buyer here are a few tips to remember:
• Show up early and register and complete paperwork.
• Examine items you plan to bid on.
• Understand the terms and conditions of the auction.
• Have your financing in order; auctions are not sold subject to financing.
• Listen closely to the auctioneer and be prepared to bid.
• If you are bidding online: Register early and don’t wait until the last minute to place your bid. You want to be familiar with the system you are using prior to trying to place your bid.
• Don’t be afraid to ask for help.