Why Sell at Auction?
Reason #1: It’s Quick Sale
-An Auction affords property owners the opportunity to dispose of property now at today’s prices, rather than tomorrow’s prices. Time is money. Depending on reinvestment rates, $95,000 or $90,000 today is likely more valuable than $100,000 next year.
Reason #2: High Carrying Costs Avoided
-All property incurs costs during its private negotiating marketing period- debt services, real estate taxes, insurance payments, maintenance and sometime security. All too often, the carrying or holding costs of real estate during a private Negotiated marketing program won’t be recovered in a higher selling price. In effect, the sooner a property sells the greater the bottom line dollars in pocket for the seller and/or greater the saving that may be passed on to the buyer.
Reason #3: Property Market Value can be Demonstrated
-Instead of relying on the appraiser to assigning an asking price, the auction process demonstrates the value of the property to sellers and potential buyers. Selling property by the private negotiated method, you many wonder whether you couldn’t have bargained higher. But if the property is sold at auction, the proof of a market value is in the process itself. Moments before the final bid, another serious buyer may bid few dollars more… The selling price is truly market given.
Reason #4: Auctions Receive Maximum Market Place Exposure
Auction companies employ saturation marketing techniques during the four-to-six weeks prior to the event itself. The marketing time frame is more condensed than in traditional methods, therefore less expensive.
Reason #5: Auction Freeze the Market
Every current buyer in the market place will be very motivated to at least investigate the property being auctioned. The opportunity to make what you think that may be good to buy, as a practical matter, forces buyers to at least wait until the auction is held.
You pick the day… That’s the Auction Way
The Auction Process
Representatives of lenders should always be in attendance and usually duly authorized representatives of the sellers themselves are present so that purchase agreements can be signed immediately after the auction. Attorneys will be present to oversee contract or purchase agreement signing.
Types of Auctions
- FIRST is the absolute auction or auction without reservation. In this type of auction the seller is legally required to sell the property at the auction regardless of the final high bid price. The main advantage of an absolute auction is that it generates maximum response from the marketplace. Since a sale is guaranteed regardless of the price, buyer excitement and participation are heightened. As a result, the price of the real estate can be maximized. That’s the paradox with auctions. The lure of the low prices, or possible low prices creates the likelihood of high prices. The main disadvantage is the real estate is sold irrespective of the owner’s price requirements.
- SECOND is the minimum bid auction. Here, the owners must sell at or above a stated minimum bid. The chief advantage of this type of auction is that it creates the safety net the sellers lack in the absolute auction. However, it may limit interest in the auction only to those buyers who are willing to pay the minimum bid price making it difficult to generate the proper excitement level for higher bids.
- THIRD is the auction with reservation. The seller reserves the right to reject the final high bid price. The chief advantage of this auction is the seller isn’t unacceptable. But, many prospective buyers don’t want to invest the time an expense investigating property when they have no certainty they’ll get the property even if they’re the high bidder.
Security of Auctions
Failure to close can happen, but it isn’t frequent. If the failure to close occurs, a seller may be in a better position than someone facing a collapsed close with a private negotiated method. The auction seller can turn to the next highest bidders, who demonstrated their willingness to pay nearly as much as the buyer who failed to close.
Real Estate Auction Marketing Advances- Seller Benefits
- Never has to worry about selling too cheap
- Offers the seller another option
- Creates competition among- auction price can exceed the price of a negotiated sale.
- An auction generates excitement and heightens buyers interest.
- -Exposes the property to a large number of pre-qualified prospects.
- Requires that potential buyers pre-qualify for loans.
- Property is sold as is, where is and how is without contingencies.
- Accelerated sales- the property can sometimes be sold within three weeks of listing.
- Eliminates high seller carrying costs-(such as interest, taxes, maintenance)
- Auction brings interested buyers to a point of decision-they must act now or loose an opportunity to purchase
- Auction is a true market forum-the highest buyer pays the lowest price a seller will accept
- A seller knows exactly when the property will sell.
- A seller sets the terms and conditions of the sale, maintains control of the property throughout the auction (depending on the auction type), and actively participates in the sale process.
- Auction reduces the time the property is on the market.
- Auction eliminates numerous and unscheduled showings.
- Auction takes the seller out of the negotiation process.
- Auction is an aggressive, advance marketing program that increases potential interest in and awareness of property.
- Seller is able to obtain liquidity.
- Seller is able to move on to other investments and up capital.
- The buyer pays our commission when a 7% to a 10% Buyer’s Premium is used. The high bid plus the buyer’s premium becomes the total selling price. The seller pays no commission when a property is sold… only, marketing costs are changed to the seller.
- Aggressive advertising, direct mail and web site programs
- You choose the actual date and time that your property will be sold.
- We provide high-impact multi-media real estate advertising
- Our full-service staff of friendly, experienced associates will professionally organize, advertise and conduct your sale to your satisfaction. The success of your sale is our Most important goal!
A Full Service Real Estate Auction Company
Our company offers complete service- packaging, promoting, showing, conducting the auction from the sale to the assisted closing. We only charge for marketing costs.
Evaluating The Property
We will evaluate the property to be sold. All the physical and financial information about the property is reviewed to help decide If the property is marketable at auction. If so we will outline the marketing strategy, type of auction to be used, how the property will be shown at a prospective buyers and any post auction follow up work that will be required.
Framing The Offering
In an auction, the roles of the seller and the buyer are switched. In private settings, sellers normally set the prices and buyers set the terms. In an auction setting, the seller frames the transaction and the buyer, that is the market, sets the price on the basis of the transaction the seller frames.
Showing The Property
Members of our real estate auction company are skilled in showing property at its best. Particularly important is the auction company’s ability to anticipate questions buyers will have regarding the real estate being auctioned. Information that must available for any real estate auction is anything pertaining to the property being sold, including operating statements, rent roll information, copies of leases, and any other supporting documentation. For industrial building or user properties, information must include building plans, interior floor layers, and loading capacities.
We also offer full Auctioneer Services for:
Estate* Households* Farms* Collectables* Antiques* Liquidations
We can handle everything from packing to set-up to selling. We have a fully trained staff to handle your needs.
A Real Estate Auction Could Work For You
Assured Realty Solutions Downsizing & Estate Services is one of a handful of Real Estate Brokerages in Wisconsin that offers its customers the choice and the opportunity to use the auction or tender method to sell their property. Assured’s Downsizing & Estate Services is by far the most experienced and leading company in the real estate auction category in the Coulee Region, having successfully sold properties by auction.
A real estate auction can be a live or online event. Either way, the process is open, transparent and competitive. Buyers arrive at a fair, market-driven price and sellers realize the best value for their property.
Who should Sell Their Home by the Auction Method?
Executors - You’re busy, you want closure, you want to know market value was achieved and you want to fulfill your fiduciary duties to the estate.
Retirement or downsizing - You want to achieve market value quickly and efficiently so you can move on to the next stage of your life.
Ill health - You want to achieve market value quickly and efficiently so you can take care of yourself or move where care is provided.
Owners of unique or extraordinary properties; over-improved properties; vacant properties; multiple properties (connected or unconnected); and those who have already tried listing with no result.
Property owners in a downswing market that understand selling sooner at the best possible price is ultimately better than selling later at a further deflated price.
What Are the Advantages?
The advantages are different for different sellers, but generally think of it this way. There are three elements of a real estate sale. The price you get, the time it takes to sell it, and the terms of the sale. In a traditional listing you don’t control any of these.
You can’t predict how long it will take to sell, nor what conditions will be in the offer. You feel like you control price, but you really only control the right to say no and then keep the property. The buyer always decides the price. You merely accept or reject it.
In an auction, you control both the time and terms because you set them. And the price is controlled to the same extent seen in the traditional listing with the seller's ability to say no and refuse to sell. The difference with auction is that you are going to employ an aggressive marketing campaign to generate a high degree of interest and use the competition and the professional skills of the master auctioneer to drive the offer to its highest level. So the advantage of the auction is control.
If you are considering selling a property - talk to us about listing it and about the auction option!
“We’d like to thank the entire team at Assured for the way they made us feel a part of their ‘Family’. Their honesty and professional attitude never left us intimidated or in need of asking the question, Why are we doing it this way? During times of our uncertainty and frustration, they were clear and concise. We liked that. We will strongly recommend this auction process to others.”
-David & Liz T.
Grab the Auction Opportunity
No Longer A Last Resort
Across the country, real estate professionals are increasingly turning to the auction as a winning marketing tool. If you properly qualify your situation as a potential auction scenario (we’ll tell you how), you have an excellent chance at turning over a property quickly.
Auctions offer clients and customers new options, enhance your image as a full-service professional, expose the property to a wide market of potential buyers, and turn profits for your firm. Plenty of revenue-producing roles are available in the auction process. You don’t have to become an auctioneer to benefit. You can earn a fee as a referring agent/broker, a cooperating agent or a listing agent. However you participate, you’ll add one more marketing weapon to your reserves of professional techniques.
The Two-Thirds Rule
Not all properties should be sold at auction, but certain properties and situations will benefit greatly. A dependable way to determine whether a property lends itself to auction is this: If two of the three main components of a transaction (market, the seller and the property) lean favorably toward auction, then it should be offered to a seller as a sales option.
Here’s a checklist to figure out if the Two-Thirds Rule applies to the property you are handling:
Do these characteristics describe the market?
· a changing market
· a dull market -- too much product but with buyer interest
· not enough of the particular property type (unique, lake front, etc.)
· an emerging market -- for example, a new development whose sales could take off once some properties are auctioned
· a seller’s market with high demand and high competition
Do these characteristics describe the seller?
· needs immediate cash
· going through a partnership or marriage break-up
· is moving out of state
· wants to liquidate an estate
· is retiring
· is an auction-minded seller
· has a listing that is about to expire
· has already purchased another house
· knows auction will bring a fair market price
· has financial problems
· has high carrying costs on the property
Do these characteristics describe the property?
· carries a lot of equity (25% or more)
· unique -- enough market interest to encourage competition
· burdening the owner with high carrying costs
· vacant -- vacant properties may encourage vandalism
· difficult to appraise -- unique properties are difficult to appraise
Applying the Rule
For example, you are marketing a model home in a successfully sold-out development.
The house is two years old, fully decorated, with four bedrooms and two and one-half baths, a whirlpool and two fireplaces. It’s located on a two-lane highway across from a park and baseball field. When the development was under construction, some buyers showed interest, but more recent prospects say they would rather purchase the brand new homes in the development.
Using the Two-Thirds Rule, fill in information for each of the main categories. Add up the elements in each category and make a judgment of whether or not the category is favorable or not for auction. Would you recommend an auction in this situation?