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Selling Real Estate by the Auction Method

People choose the auction method for selling their real estate because it is fast and clean.

There are many reasons why they may be in a hurry to sell:

  1. They may be settling an estate and want to distribute the proceeds to the heirs quickly.
  2. They may be relocating to a new city and need their equity to finance the move.
  3. They may have tried other methods and failed to find a buyer.
  4. Or perhaps, they just want to avoid having dozens of strangers going through their home while they are not there and then presenting low-ball offers or no offer at all. An auction is the fastest, cleanest way to bring buyers and sellers together and complete the sale.

There are some pretty strong misconceptions of how auction marketing works. Be assured that it is a myth that auctions are only for distressed or foreclosed properties. As stated above, people want to sell their property fast for a variety of reasons and the traditional method of selling real estate is anything but fast.

In the auction method, the waiting is eliminated, along with the lengthy period of time that your home must be available for strangers to traipse through. Buyer contingencies and painful negotiations are gone. Instead of your property being one of many in a real estate agent’s ad or brochure or a needle-in-a haystack in the Multiple Listing Service, it will be marketed individually and exclusively nationwide with the goal of bringing the maximum possible number of prospective buyers to your door for a one-time event, culminating in a sale. The auction method of marketing usually compresses the sales process down to a 30 day period and typically brings fair market value, often more than the seller expected. Instead of setting a sales price and negotiating the price down as in the traditional method; buyers are bidding the sales price up until the price reaches what the market will bear.

There are three types of auction that we conduct:

  1. Subject to Confirmation: The seller has the final say in whether he wants to accept the final bid or not.
  2. Absolute Auction: The property is sold to the highest and best bidder without reserve as to the price.
  3. Minimum Bid: There is a minimum opening bid made known to all involved prior to the auction.

Whichever type the seller chooses, it is made known in all advertising and marketing of the auction so that all prospective buyers will know what to expect on auction day. All properties are sold “as is, where is” thus there are no contingencies, etc.

  • For the seller, the auction method is a turnkey transaction and all he has to do is guarantee a good and marketable title and deposit the proceeds after the closing.
  • For the buyer, inspection and due diligence is provided prior to auction date as well as pre-qualifying done. The winning bidder will then make a substantial cash deposit on auction day with the balance due usually within 30 days.

AUCTION SALE vs. TRADITIONAL SALE

Auction Traditional
The Focus is on YOUR property alone! The Property is one of many being listed and shown.
The result is offers in 30-60 days or less. Property may remain on market for months or years without offers.
Extensive advertising is done featuring your property exclusively. Minimal advertising is done with heavy reliance on Multiple Listing Service
Buyers act on your schedule. Little motivation for buyers; you wait on them.
Auction provides catalyst to promote buyer interest. Price reduction is encouraged to create buyer interest in activity.
Auction realizes the property’s true market value. No limit on upside potential. Upside potential limited by asking price. Usually negotiated down from there.
All conditions of sale are set in advance, thus eliminating negotiations. Seller must negotiate all aspects of sale.
Property is sold without contingencies. Contingencies are common.
All offers are presented to the seller before and during the auction. Few offers are received, and rarely multiple offers at one time.
The guesswork in determining the asking price of property is eliminated. Seller risks overpricing, and thus seeing little interest, or under pricing and selling for less than the property is worth.

The Prime Auction Group is Texas licensed and specializes in commercial properties, farm and ranch, estates, and investment real estate. Call us at 800-200-9838 extension 1 and we will be glad to talk to you about our targeted marketing program.

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