Real Estate Auctions

The use of auctions as a marketing tool in the real estate industry is growing, dissolving the perception that this selling technique is limited only to distressed properties. In many cases, properties auctioned are neither distressed buildings nor oddballs no one wants. Very often, successful auctions involve properties in areas where there are either too many or too few buyers, or when the seller needs a pre-determined sale date, rather than physically distressed properties.

If you're in a situation where you need to sell your home quickly, but have had few results through traditional marketing methods, the Daytona Beach Area Association of REALTORS® suggests sale by auction as an alternative method.
According to a survey of 131 U.S. auction firms conducted by the National Association of REALTORS®, the number of real estate auctions held nationwide is in the thousands and growing. The survey also found that the number of bidders who participated in real estate auctions increased by 27.6 percent in one year to more than 625,000 compared to the previous year.

Before you actually put your property on the auction block, however, take time to learn more about how the process works, including the bidding and any fees or commission that will have to be paid to an auction company or real estate broker who provides a buyer. Keep in mind that there are several keys to a successful auction -- well-informed buyers, strong publicity, an adequate viewing period and a full explanation of the sale terms.

The most popular type of auction is a public auction where properties are generally sold in as-is condition. Essentially, a public auction is a negotiated sale with a time deadline. Every step that would be taken in a private, negotiated sale should be taken in an auction. The auction fee charged to a seller is negotiable between the seller and the auctioneer. Brokers and sales associates who bring potential buyers to a real estate auction also can earn commissions in the event of a sale. Since sale terms are set prior to the auction, all buyers bid on the same contract, resulting in no counter-offer hassles.

Real estate brokers and sales agents are using auctions more frequently to sell properties, especially if those properties need to be sold quickly and are located in a sluggish market. Developers also are increasingly using auctions to sell projects that have yet to be built. The difficulty builders are having in obtaining financing for planned projects is causing them to auction from the blueprints to prove to the lender that the units they intend to build have buyers.

If auctioned correctly, almost any property from a single-family home to an entire condominium building can be successfully sold. For many first-time home buyers, auctions can provide an alternative to purchasing an affordable starter home through the more traditional home buying process.

Auctions can and do provide fast turnover, save holding costs on the property, and in many cases, result in the best net profit for the seller. The auction technique also offers a method to sell properties immediately that otherwise would not be sold for a long period of time - and buyers like the quick sales process, as well as the notion that they, not the sellers, are setting the property price.

For more information about auctioning as a viable alternative to traditional real estate marketing, consult with a local REALTOR®.