Start the Bidding!…if you have ever been at an auction, you’ve probably experienced the thrill of bidding on your favorite piece of furniture or collector’s item. Even watching auctions on television for collector’s items such as old baseball cards, civil war weapons, and movie items as they are conducted on popular television shows like The Antiques Roadshow and guesstimating what the final value of the auctioned item will be can be a pleasant pastime. But, have you considered attending or participating in a real estate auction?
While real estate auctions are hardly a new home-sales technique, and have been a customary way of selling foreclosed properties for many years, the real estate industry has taken more notice of this technique in recent years. Real estate auctions generate buzz, create a sense of urgency for a sale, and have been known to spark bidding wars for properties that otherwise could stagnate on the market according to a National Association of Realtor’s online article, “Not Doing Auctions? You’re Missing Out”.
Statistics reported in the article showed that residential real estate auctions grew by 12.5 percent in 2006, making up the fastest growing sector of the auction industry, according to the National Auctioneers Association. With new real estate online tools being made available, some of these auctions are occurring online with participants from around the country.
What auctions are doing for home sellers is drawing pools of potential buyers to a property, especially when the bidders perceive that they’re getting a good or better deal than they otherwise would be by traditional home selling methods. With online marketing, interested prospective buyers can be drawn from around the country and not solely from the state that the property is located in. Buyers usually grow through a pre-qualifying process in order to bid. Although, homes sold in this manner are still a ways from becoming the primary way property is sold, the growing trend is a good indicator that online or offline auctions are a viable option for a home seller.
“Agents and sellers can use the competitive edge that auctions generate to maximize the return,” Gehringer said, a real estate auction expert in Winchester, Virginia. Case in point: At one auction, a townhouse’s market price in the $250,000s skyrocketed to the $400,000s after a bidding frenzy, said Gehringer, who does 80 percent of her real estate transactions with auctions.
The three main types of real estate auctions are:
o Absolute auctions – Properties are sold regardless of price to the highest bidder.
o Minimum bid auction – A minimum published price is set that guarantees the property will not be sold for anything less than that number.
o Reserve auctions – A minimum price is set by the seller that is not disclosed to the public. The seller reserves the right to accept or reject the highest bid.”
While real estate auctions are growing in popularity, some in the industry still view auctions as a last resort in the home selling process. However, as sellers and their realtors become more knowledgeable and familiar with the process, and online tools grow in sophistication; a homeowner is likely to see the option of selling his home at auction not just as a way to unload hard-to-sell or foreclosed properties but as an efficient way to get their home sold in any market.