When competition is high and inventory is wide, home sellers need to be doubly creative to attract buyers. An alternative to selling through traditional realtors, public auctions assemble serious buyers together in one place, at one time, and let the bidding begin. Particularly for properties considered “exclusive,” individuals call on auctioneers to bring them the bottom-line results they want without the wait they hate.
Prepare your house for sale. Just as you would when using a traditional realtor, you and your home need to be ready to move. The property needs to be in the best condition for showing and you need to be prepared to move out. Auctions work quickly.
Perform comparables. Before you contact an auctioneer, find out what the comparables are for your property. Subscribe to “Banker and Tradesman“ to get an accurate assessment of properties selling in your area within the last six months.
Set your price. While this number needs to be negotiable, have an idea of a price you will not go below. It is a misconception to think that once you sign with an auctioneer, someone can buy your property out from under you for a piddling amount. The lowest price you are willing to accept is called the “reserve” and no one will be able to purchase your home below it unless you renegotiate your contract with the auctioneer.
Hire an auctioneer. Find someone whose firm specializes in real estate in your area. Be certain that they are licensed, bonded and certified through both their state auction affiliation and CAI (Certified Auctioneer’s Institute), the only national auctioneer’s association.
Negotiate the commission. Auctioneers charge commissions comparable to realtors and put the advertising burden on the seller. Use whatever leverage you can, including suggesting that you’ll go with a competing realtor or auctioneer, to settle on the best commission possible.
Insist upon open houses. No reputable auction firm would deny you the opportunity to show your house to as many interested bidders as possible. While real estate auctions brought forth through foreclosure proceedings do not have the luxury of open houses, no property being sold at will should do so without viewings.
Sign a contract with the auctioneer that includes all the the specifics above. Have an attorney look over the contract to be certain that the terms and conditions are clearly and accurately defined.
Be involved in the marketing. How a property is marketed for public auction is even more important than with a traditional sale. Understanding the potential bidders for your property can mean a huge difference in dollars for you. This is where hiring an experienced auctioneer with a proven track record is critical. He will bring serious, pre-qualified bidders to your auction.
Auction it. On auction day, your property is in the hands of the auctioneer and the bidders. If you do not attend the auction, you may still want a representative there to assure you that everything is handled professionally.
Accept or reject the bid. If your minimum bid has been reached, the bidder signs a Purchase and Sales agreement at the auction and moves toward closing. If it has not been met, the auctioneer will offer your property to the high bidder or the second high bidder at your minimum price. If the bidder is unwilling to raise his bid, the auctioneer will work with the bidder and you to see if a middle ground can be reached.
Sign the purchase and sales agreement. The auctioneer will hold the deposit in escrow until the closing.
Close on the property. The auctioneer usually attends the closing with you, the buyer, and your attorneys. When the closing costs are tallied, the auctioneer’s commission is paid.