Putting your home up for auction can be an effective and efficient way to sell a house. Many times a property may end up selling for more than it would have when sold traditionally. Before you decide to auction your home, there are a few basic factors to cover.
Tips for a Successful Auction
Before you sell your home at an auction, there are a few tips you should follow to make it as smooth as possible. If you go in without a plan, chances are you won’t have much success.
- Have realistic expectations, including a fair sales price, terms, and timing.
- Have a well-planned marketing plan targeted to prospective buyers.
- Use a reputable real estate auction company to make sure everything is professionally conducted.
- Prepare the property for sale so it is presented to buyers in its best condition.
Types of Real Estate Auctions
There are three types of auctions:
- Minimum bid
Work with your auctioneer of choice to determine which auction is best for you. Make sure that the pros and cons of each are discussed in-depth so you can make an informed decision.
An absolute auction is one without a reserve. Meaning, the highest bidder will win the home no matter what the bid is. This type of auction can be risky since you could lose money if the market value of the home is not met.
Minimum Bid Auction
When you choose to sell using a minimum reserve auction, you must first set a reserve price. The reserve price is the minimum amount you expect to be paid for the property. It requires the auction to reach a certain amount or there’s no sale. Before setting a reserve, you need to understand that you may have to pay a no-sale fee, or the price you pay the auctioneer if you change your mind or the property doesn’t sell. A no-sale fee can be just as much as the price of selling the property.
In a reserve auction, a minimum bid isn’t published and the seller can reject or accept the bid up to 72 hours after the auction. Reserve auctions are the least preferred by buyers because they have no guarantee that they’ll be able to purchase the property, even if they win.
Choosing the Right Auctioneer
In order to have a successful auction, you need to hire an auctioneer who regularly handles sales of properties like yours. Doing so will make it more likely that he or she will attract buyers that want to purchase your home. A locally based auctioneer may understand your market better than a national company. However, some national companies have extensive databases of potential buyers that they can reach out to and generate interest in your home.
Questions you should ask potential auctioneers include:
- How many houses have you sold? If they do not have many sold homes under their belt, you may want to keep searching for a more experienced professional.
- What’s your marketing plan? Their advertising strategy can make or break the success of your auction.
- What are your credentials? Most states do require real estate auctioneers hold a real estate license. Certified auctioneers have completed a three-year training program.
- Can I speak with your last three clients? Checking references is always good practice especially when you are dealing with the sale of your home.