Tuesday, October 24, 2006

Auction your Home?

There are times when people try incredibly hard to sell their home but simply can't. This often puts people in precarious situations. Some are forced to carry 2 mortgages. Others move out of state and have nobody to watch their vacant home. Some simply get in over their head and need to get out of their mortgage before foreclosure proceedings start. In order to produce a quick sale of their home some people in these situations have turned to auctions.

While this is still a fairly uncommon method of selling your home, auctioning is gaining popularity. After sitting down with Randy Wells, Vice President of the National Auctioneers Association and Tranzon Auctioneer, I found out the full scoop on when it is beneficial to auction a home and the process of auctioning a home.

First, auctioning a home has the allure of "I'm going to get a deal," and as we know deals attract crowds. By creating the image of desperation (ie: I have to get out of this house now), crowds gather. It is not that you actually have to be desperate, auctions by default simply create the image of desperation. This is probably because foreclosed homes are usually auctioned.

Second, auctioning a home is not always beneficial. For a person who has ample time to sell and is not financially burdened, using a REALTOR is probably a better option than using an auctioneer.

Third, auctions work well when there is a buzz. Randy usually requests 1% of the sales price of the home for advertising prior to auction. This pays for huge newspaper ads, radio time, maybe even TV time. The more buzz, the more people at the auction.

Fourth, auctions are fairly effective. According to Tranzon, 85% of homes they auction produce an acceptable transaction that will close in a reasonable time frame. I am not sure the statistics on using a REALTOR, but I don't believe it is that high.

Fifth, you can set an undisclosed reserve. In other words you have a minimum amount that you will take for the house. If the bids don't meet the reserve you don't have to sell.

Sixth, most auctioned homes are sold as is. Tranzon notes that many sellers can avoid the timely and sometimes expensive inspection process by having open walk throughs prior to auction. This allows potential buyers to view the home and even have a professional inspection prior to purchase. This usually speeds up the closing process after the auction.

Seventh, most auctions are held live, right at the home. Randy says he likes to create a competitive atmosphere, thus jacking up the price of the home. He said his favorite auction he ever performed came down to a bidding war between 2 Montana cowboys who hated each other. Their testosterone made the property sell for thousands over the expected price.

In the end auctions are a very viable option for selling your home. However, even Randy believes that working with a REALTOR is vital, and usually the best way to sell a home.

1 comment:

Elena said...

Selling a home via auction will afford you an opportunity to get a good price for your home if you have been unsuccessful using the conventional sales method.

Thanks !!
For Sale by Owner Homes