Virtual Entrepreneur

Tips And Tactics For Selling Your Home Through Auction

August 29th, 2006 | Author: MrMoney

RealEstateJournal:
… Many people hesitate to use auctions to sell their homes, thinking it reeks of desperation or impending foreclosure. But that’s not always the case. Often, sellers turn to auctions to create a sense of urgency when there are too many similar houses on the market, or, conversely, when a property is unusual in some way. And as anyone who’s ever surfed on eBay can attest, the excitement of an auction can churn up interest where none had existed before.

A friend of mine discovered that when he tried to sell his huge, beautiful farm in the Eastern Shore of Maryland a few years ago. It was in pristine shape and listed with the top agent in the area, but was situated on a remote peninsula, where few people ever visited. Frustrated, he put the house up for auction with a company that specialized in real-estate sales. He sold it for a little more than his asking price before the auction ever took place. The buyer had become entranced with the property from the brochure the auction house had sent out, and decided to grab it before anyone else could.

So how do you find a good auction house? The Gwent Group, a 58-year-old Bloomington, Ind., consulting firm, says there are 1,000 auction firms across the country that specialize in real estate, and they’re getting busier all the time. Sales of residential properties reached $14.2 billion last year, a 24% increase over 2003. Stephen Martin, president of the Gwent Group, suggests that you visit the National Auctioneers Association and look for an auctioneer who has received a Certified Auctioneers Institute designation, which requires members to have at least 2 years of professional auction experience and adhere to a program of continuing education. You should ask auctioneers to provide you with a marketing plan, evidence that they’ve sold homes similar to yours, and samples of the sorts of advertising materials, including brochures, that will be used to promote the sale.

Once you’ve signed with a firm, you’ll have to decide whether to sell the house with a ‘reserve’ or floor price, or ‘absolute,’ meaning the highest bidder wins, no matter how low the bidding stops. Although setting a reserve price may give you less anxiety, homes sold absolute usually attract more bidders, and therefore command higher prices. Normally, about 6 to 12 weeks elapse between the time you sign with an auction house and the sale date. Expect to pay a seller’s fee that typically ranges from 5% to 8% of the purchase price to the auction house. You’ll also have to pay for a home inspection, since potential buyers don’t want to be surprised by leaky pipes or defective furnaces. ‘They know that once the hammer goes down, it’s theirs,’ Mr. Martin says.

Share and Enjoy: