Sell At Auction
Auctions can be an effective means of selling your home. Many within the buying community will specifically target auctions, because they know that you are committed to making an immediate sale.
An auction is relatively straightforward. Potential buyers come to the auction at the predetermined time and place and bid on the property. The highest bid at the end of auction buys the property for the amount of their bid.
As the seller, you can put yourself in a very powerful position if your home is in high demand, however the opposite is also equally true -- if there is lower interest in your home, an auction could be a less than ideal solution for selling your home.
PRO: There is a specific time window where the sale takes place. Potential buyers who are aware of the auction will know exactly when the auction is taking place. This can create a sense of urgency among prospective buyers.
PRO: Competition! Bidders who show up to the auction all want what you have. If the auction is marketed and handled well, this simple fact has the potential to put you in a powerful position as the seller. Bidders may fight over your property and end up paying more than they had originally intended to, which means more money in your pocket.
PRO: No lengthy open houses. You will not have to worry about strangers strolling through your house for weeks (or months) when they may or may not intend on making an offer in the first place.
PRO: You will be dealing with serious buyers only. The people who show up to the auction for your house will be registered to bid and looking to purchase your property.
PRO: Usually makes for a quicker sale than doing a conventional listing.
PRO: You have the ability to set a reserve price, which is some minimum dollar amount which must be met in order for you to be obligated to sell. If the reserve price is not met during the auction, you can decline any offers received and simply not sell. However, beware -- a reserve auction may scare away bidders, as opposed to a no-reserve auction.
PRO: Buyers bid at their own risk. Property is auctioned "as is" and you have no obligation to fix up the property before selling.
CON: There is no guarantee that your house will sell for what you might consider a good price. As the seller, you will have the ability to set a reserve price as mentioned above, as well as a starting price. However, this can be a delicate balancing act -- if you set the starting price too high in hopes of getting a great deal on the sell, you may end up with no bidders! Keep in mind that bidders are there for one reason -- to get a bargain.
CON: There are fees associated with auctioning your house. These fees include commission, advertising costs, admin costs, legal costs, etc.
CON: If the property is "passed in" (your reserve price is not met and you decide to not sell), potential buyers can be scared off from future auctions.
CON: Bidding can be slow and send an incorrect message about the true value of your home.
CON: Although the competitive nature of the bidding process has its benefits to you as the seller, it can also scare off buyers who do not want to get involved in drawn out bidding wars.
CON: Real estate agent auction contracts will likely contain provisions which give them sole selling rights up until the auction and then for a specified amount of time following the auction if the property is passed in. This means you cannot work with any other agents to sell your property during this time period.
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