The Fundamentals of Real Estate AuctionsReal Estate Influence
September 24, 2012 — 860 views
Real estate auctions have traditionally been viewed as last-ditched options for homeowners in serious fiscal trouble. In today's tough economic climate, many bank-hosted home auctions sell off properties that homeowners have lost to foreclosure. However, it's important to note that some homeowners prefer to sell their properties at auction because of the speed, convenience and potential gains associated with this method of real estate sales.
As a real estate professional, you should be prepared to help clients who need to sell quickly or who believe that an auction will be most beneficial given the nature of their property. It is essential that you be well-versed in how real estate auctions work. Review the strategies and pointers below, which are designed to help you make the most of real estate auctions no matter the size of the property you wish to sell.
Carefully evaluate the property's likely selling price at auction with homeowners. Selling in an auction can be extremely profitable for some homeowners. If you are selling a home in a coveted area, you may be able to get a higher price at auction than on the retail market. Carefully evaluate auction projections with your clients and discuss the pros and cons of gambling on sales price. You should never promise that a property will get a certain price at auction.
Weigh the benefits of a quick sale over the benefits of a high profit. Auctions can be beneficial even if a property will not bring a very high sales price. Some sellers simply wish to get rid of properties quickly. Ask your clients whether they are more concerned with receiving a high sales price or selling quickly.
Explain to sellers that there are few contingencies when selling at auction. Properties are sold at real estate auctions as-is, meaning that buyers will not negotiate with sellers to complete home improvements prior to a sale. This can be an advantage for sellers who are attempting to get rid of a house that needs serious renovations.
Choose an auctioneer with a solid advertising record. After your client has decided upon an auction, you will need to search for an auction house or auctioneer who can sell the property. You should search for an auction house that has depth-of-experience in the real estate field. It is the auctioneer's responsibility to drum-up interest in a real estate auction. You should check to be sure that the auctioneer advertises sales aggressively and can bring in potential buyers.