The auction method is increasingly being recognized by real estate agents and brokers as an enticing option for selling their properties, and with good reason. From reduced time on the market to maximized realized value, several factors have turned agents and sellers alike to auctions for every type of real estate imaginable. While long associated with foreclosures or distressed properties, in recent years the increasingly-recognized benefits of real estate auctions have led to a growing trend of them becoming the preferred method of sale for every type of property — often as the first resort.
So why is that? While the full list of real estate auction benefits is long and varied, we’ve selected just a few of the big ones to help spread the word about this growing, promising trend, particularly those that are relevant to our forte: online auctions.
1.) Auctions reveal a property’s natural max value.
Setting the wrong price valuation on a property can destroy its marketability. Sellers often want to list their house for as much as they can reasonably hope to get, but realtors know that this desired listing price can often venture into unrealistic territories. If a realtor caves and allows a property to be listed at an overly optimistic price, the effect can be that an otherwise perfectly marketable listing goes without any bites, sitting on the market for months.
Auctions sidestep this dilemma. By allowing a bidding war amongst qualified, serious competitors, the property’s natural value is revealed, as opposed to the guessing game that can be the normal par for the course. Auctions create a race to the top, not the race to the bottom that unfolds when a buyer and seller haggle over an agreed upon closing price.
The exciting, competitive nature of bidding creates a sense of urgency that is conducive to higher selling points. No more lingering, on-the-fence prospects who might sit and wait for the price to drop. Bidders at auction know they have to act now, or lose out. When combined with the power of online auctions, which are known to drive competition and prices even further, you stand to make even greater gains.
2.) Online auctions go from market to close quicker.
Whereas traditionally listed properties can easily sit on the market for two months or more on average, houses at auction frequently go from initial contact with realtor to sold within 30 days. This is due to the fact that auctions grant you the luxury of setting a pre-determined closing date in advance, knowing that the property will be sold on a given day.
This is advantageous for the usual obvious reasons (less hassle, fewer open houses), but also because when properties sit on market for months on end, time is literally money. According to estimates given in mortage industry surveys, houses that sit vacant depreciate at an average rate of 2.5% per month. This is not including the costs that the owner will be required to cover in the form of insurance, maintenance, and so forth.
Online auctions, in particular, open the property up to out-of-state buyers (frequently seasoned, prepared investors) who are not subject to local market conditions. While some areas can be buyer’s markets and others seller’s markets, this distinction can change across town or county lines. Online auctions remove the uncertainty, and bring that crucial quick turnaround.
3.) Auctions even the playing field, and attract the right crowd.
This ends up being good for all parties involved. With open bidding as well as mutual terms and conditions applied to all parties, bidders are given a confidence that spurs active participation and competition, knowing that they are on an even playing field with other bidders. The presence of other bidders also serves as a bolster to motivation, since each knows that there is at least one other person willing to go at least as high as the nearest increment to them. This can soothe worries of overpayment, and in best case scenarios lead to a runaway snowball effect that can maximize the eventual final selling price on a property.
Auctions also tend to attract “high-quality” buyers, serious buyers and investors who have done their homework and come ready to bid (sometimes on multiple properties), knowing that they have to act now or lose out.
Which leads us to our next point…
4.) Auctions earn you a list of serious, dedicated bidders.
The other piece of good news about auctions is that these “high-quality” buyers don’t disappear after just one event. Many are repeat customers who will be looking to obtain more than one property in the long run, and are not necessarily committed to one particular place. This means that those bidders who lost on one auction will very likely still be interested in your other properties in the future.
Assuming that your approved bidders have all been vetted, you will now have a solid mailing list of quality bidders to market your future properties to, with better than normal odds that they will continue to be interested. If you have other listings posted on your own online platform, bidders can just do the work themselves, browsing your other available properties that are brought to their attention.
These are just a few of the ways that real estate agents and brokers have found auctions to be a uniquely beneficial option for selling property, but this list is of course far from comprehensive. Many offer auctions in conjunction with more traditional methods, so no major risk is being undertaken by simply having the option available.
Of course, if you aren’t yet sold on auctions, there’s no need to take the plunge yet. SAE’s private label platforms are also perfect for simply listing your traditional properties online to expand your marketing efforts.
Are you ready to bring your listings into the world of online auctions? Sharp Auction Engine offers a free 30-day trial.
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