Do Real Estate Auctions Work in this Market?

 

real estate auctions

Has the Home auction trend started?  Todays buyers are looking for the best deal and now that they can get it. 

Auction is the new “buzz” word in the real estate industry as market conditions require more intense marketing and specific timelines in order to sell properties quicker.  For Developers this can be a great alternative to turning a lot of inventory in a short period of time.  If you have tried the conventional methods of real estate sales and home inventory remains on the market, consider an auction.

Cayon Development sold 23 homes, at $123,990 each, for a total of over $2.85 Million in sales. Creative Mindworks provided consulting and marketing services to Canyon Development through a division of the company, known as Disposition Trust, LLC. This division assists builders, developers, banks, and other institutions in selling and marketing their real estate assets using the most effective strategies that maximize revenues in expedient fashion. 

 

Current Market Value
A real estate auction is the purest way to determine the current market value of your home. Once a competitive bidding environment has been created, buyers will bid up to what they are willing to pay. Auctions are attractive to buyers because they are always looking for the “deal”. However, competitive bidding will drive the price up. Sellers look to the Auction method when they are highly motivated to sell, wish to sell quickly because of circumstances or wish to liquidate to re-enter the market as buyers. Whenever a quick sale is desired, auctions should be considered.

Cost Considerations
Auction does not necessarily mean losing money. Consider what it cost to hold the property, (mortgage, maintenance, taxes and insurance) for say six (6) months vs. auctioning your home for slightly less right now. Consider the selling cost to sell it the conventional way, using a real estate brokerage (typically a 6% commission, repair costs, your closing cost and, in a buyer’s market as we are in today, the seller would most likely pay the buyer’s closing cost also). With auction, you may not pay any commission. More than likely, you, as the seller, will pay the expense of marketing your property and your selling cost would consist of only your closing costs.

No Contingencies
Auctioned properties are generally sold, “as is,” and without any contingencies, such as inspections which can result in repairs the seller would be expected to pay for. “As is” does not mean you do not have to disclose all things known about the property to the buyer. In fact, the buyer should get inspections and/or appraisals before the auction in order to know what he/she is buying, “as-is.” Since there are no contingencies, including the buyer’s ability to get financing, usually auctions close within 30 days with cash or financing already in place. Auctions bring “ready” buyers