Tag Archives: Auctions

4 Things Sellers Need to Know About Property Auctions in 2018

The internet is home to millions of articles explaining 5 things to do or 10 things to do for buying property at auctions. In simple words, every article is talking about things to do for purchasing residence at house auctions. There is hardly any article talking about the things sellers should keep in mind during or before selling properties at auctions. This limited approach of agents is making auction events like a one-way road.

Everything for Sellers to Keep In Mind Prior to Selling Residences at Property Auctions:

This is what we are going to discuss in today’s article. Every coin has a flip-side. Without a doubt, auctions are definitely a platform for investors to buy residential properties. But if you look at the other side of house auctions, sellers, or estate agents get a chance to sell properties for making money. But there are certain things they have to learn about. Let’s talk about them below:

Auctions Help Sellers to Sell Properties at Actual Market Price:

Given below are the three big reasons of it:

• All buyers get an equal opportunity to buy residential investment properties for sale.

• Every buyer is given an equal treatment.

• Buyers place their bids in fiercely competitive environment.

What makes auction houses more profitable for sellers is the fact that if buyers keep chipping with their bids, auction continues indefinitely. The winning bid reflecting the highest price is shown only when everyone stops bidding and the clock expires.

The price of the winning bid is what the market will bear and the maximum amount of money that a buyer can pay. Most importantly, property auctions allow sellers to set the reserve price. This is why sellers don’t have to be content with the price they do not want to sell their properties at.

Only Eligible Bidders Bid on Auction Day:

Many auction platforms ask bidders to show proof of funds and fulfill rest of the eligibility criteria to be eligible for bidding at the auctions.

Financial Institutions or Lender Finance Investments:

Even financial institutes and lenders prefer financing investment properties for sale at auctions. As for reason, they have all your income proof, proof of funds, and other important documents already in their hands to secure the money they are lending you to finance your investment.

Transparency and Level Playing Field:

This is another thing sellers should know about prior to visiting auction rooms for selling their investment properties for sale. Meaning, no-secret handshakes and no backdoor deals etc. Auction houses disclose every single Term & Condition upfront to all buyers and sellers. This helps both buyers and sellers feel that they are on the same page and they are not overpaying for anything. Nothing is being hidden from them.

Final Words:

Hopefully, this article helped a seller like you to learn something useful prior to visiting the auction room for selling their properties.

Real Estate Auctions – The New Land Rush

On a sunny afternoon in Florida, an energetic crowd gathers on the lawn of a high end luxury estate. A loud and eager banter between an auctioneer, a group of bidders and bidder assistants fills the air. For several minutes the auctioneer asks for the next highest bid and the bidders respond. Suddenly the bidders grow silent. The high bidder holds his breath in anticipation of winning the auction. The auctioneer calls for one more bid. In a loud clear voice which rolls over the audience he says, “Fair warning, last chance” the auctioneer pauses, “SOLD!” And in less than 10 minutes another multimillion dollar estate has changed owners.

Successful real estate auctions like the one above are happening all over North America and the Caribbean. Recently real estate auctions have been on the rise, the increase in popularity is partly driven by growing inventories and fading buyer confidence. Properties that were selling in weeks using traditional methods are now languishing on the market unable to attract buyers even as seller’s lower prices. Many say the real estate boom is over but savvy buyers and sellers are profiting from real estate auctions.

Real Estate Auctions Work in Up or Down Markets.

Regardless of trends or market cycles, real estate auctions provide an open and transparent process for buyers and sellers. Properly conducted real estate auctions attract ready and willing buyers and motivate them to act now.

The auction method removes the “wait and see” attitude which serves to further depress real estate values. Buyers are always concerned about overpaying. Buyers gain confidence with their purchases at real estate auctions because they can see what others are willing to pay.

When market demand is high and inventories low, real estate auctions can deliver selling prices well above what a willing seller would have accepted in a negotiated private treaty sale. In good selling climates many property owners using traditional real estate methods; negotiating with one buyer at a time, leave thousands of dollars of equity on the table. During up markets real estate auctions are the best way to establish top market price.

Evaluating Your Real Estate for Auction

Not every property or seller for that matter makes a good candidate for auction. First of all sellers must be ready to sell now and for the current market value. Also a real estate auction will not fix problems caused by a downturn in market value of your property, if you owe more than a willing buyer will pay, be prepared to come to closing with your check book.

Properties that do well in real estate auctions have a high uniqueness factor. Ask your self, “What makes my property different from most others?” Maybe you own a resort property or high end luxury home, commercial properties and land do very well at auction. Real estate auctions thrive on uniqueness. If your property is like everyone else’s, the best thing you can do is offer the most competitive price.

Most importantly sellers must be reasonable about setting a minimum bid. A seller must look at the lowest, most current comps and price below that to generate the interest and urgency necessary for a successful real estate auction. Once the auction begins and qualified bidders start competing against one another you can watch the selling price increase.

Locate a Qualified Real Estate Auctioneer

Start by checking with the National Auctioneers Association, the best real estate auctioneers belong to this organization. These real estate auctioneers are well trained and adhere to a standard of practice and a code of ethics. Many attend the annual International Auctioneers Conference where the latest techniques and innovations in the real estate auction industry are presented.

Find out if the company you are interviewing is a full time real estate auction firm. Many real estate agents are getting auction licenses yet have no experience with the auction method of marketing. Conducting a successful real estate auction is nothing like (private treaty) traditional real estate sales. Go with a real estate auction pro.

You’re probably better of with an auction house that specializes in real estate auctions. There are many qualified auctioneers who have generations of experience selling personal property; furniture, dishes, lawn equipment and the occasional rare painting. Selling real estate at auction is a complex matter that should only be attempted by full time experienced real estate auction professionals.

Commissions and fees may vary, sellers must pay all marketing expenses up front and buyers typically pay 10% of the sales price to the auctioneer of which a share goes to participating real estate agents.

Types of Real Estate Auctions

Auctions are effective because they create a seller’s market. Professionally conducted real estate auctions create urgency, a reason to buy today and competition for the property. Terms and conditions of sale are established ahead of the auction. Real estate auctions will follow one of these three approaches:

Absolute Auction

The property is sold to the highest bidder regardless of price- using this process often returns the highest sale price.

Minimum Bid Auction

Seller agrees to sell at or above a published minimum bid price – this method is useful for internet auctions.

Seller Confirmation or Reserve Auction

With a reserve auction, the seller “reserves” the right to accept or decline any bids usually within 48 hours of the auction. Reserve auctions are used when there is a lien on the property from a lender or a court ordered sale with a minimum selling price.