Auctions have been around for a long time. They’ve been used to sell cars, raise money for charities, and unload distressed properties.
But they’re now becoming the cornerstone and the optimal way to sell and buy real estate.
Australian-Based real estate firm, Harcourts, has been a clear leader in using the auction process to stimulate the market and attract more buyer interest.
“We’ve seen a really big jump in the process, 60 percent of the real estate transactions in Australia are done via auction and 80 percent in New Zealand. We also see 50 percent more inspections on a property going to auction because it does capture a larger market,” says top auctioneer, Ben Brady, from Harcourts Brady & Co Auctions.
Billions Sold Via Auction
Over the last five years, Brady is responsible for calling, negotiating, and selling more than $4 billion worth of property using the auction process.
Here in the U.S., however, a stigma is often associated with the concept of home auctions.
“When you hear auction you think distressed property or foreclosure. This process is completely different. From the seller’s perspective, we’re opening up possibilities and enabling them to see exactly how much buyers are willing to pay for their home. From a buyer’s perspective, the guessing is gone. On auction day they can see their competition and decide if they want to increase their bid to get their offer accepted,” says Plumlee.
The live auction program establishes transparency and up-to-the-minute market conditions at the live auction which is drastically different from the traditional real estate process.
“At the listing appointment, sellers often think their home should be priced at a certain point but they might only be basing that price on sold comps. The minute we put a price on a home, there’s a good chance we’re under-pricing it,” says Plumlee
By putting the home up for market, Plumlee says buyers can bid openly encouraging an upward trend in offers much like accepting multiple offers on a home.
The difference, though, is that because it’s a transparent process–conducted publicly–buyers can see, in real-time, how much more they have to agree to pay in order to purchase the home.
“The closed-door negotiations don’t help sellers or buyers. Instead, using the auction method, you let the current market determine exactly what your property is going to sell for,” says Plumlee
Rest Assured, Your Home Won’t Be Sold Below Your Reserve Price.
The auctions are typically held at the home. Sellers are guaranteed a reserve price so that the home won’t be sold less at auction.
Major Benefits Of A Live Home Auction:
- A set date for sale: creates urgency and stimulates the real estate market
- True understanding of the value of your home
- Greater audience of potential buyers
- Increased competition between buyers
- Transparent bidding process
- Ability to accept offers and sell home at any time through traditional method
- Non-Contingent sale: buyers must meet all auction terms, register to bid, conduct all due diligence on the home, have completed all necessary documentation to close, and have a deposit cashier’s check with them on the day of the auction.
When their bid is accepted, the non-refundable deposit is placed in escrow and the closing process begins.
If the home doesn’t sell on auction day, Plumlee says the property can still be sold traditionally, but now there’s greater knowledge about the home’s true value on the marketplace.
“The thing that I love is auctions get results…bang! There on the day,” says Brady.
To learn more about the live auction program, email info@Talechia.com