While going through a traditional realtor is among the most popular options in selling a home, taking it to auction in some instances could bring you more money.
If you’re looking to sell your home, you’ve probably embarked upon a DIY education course on ways to get the best price for your property. While going through a traditional realtor is among the most popular options in selling a home, taking it to auction in some instances could bring you more money.
You might have already stumbled upon a few “myths” about selling your home at auction, which need to be dispelled. First and foremost is the myth that a home sold at auction is a property in distress, which is bogus – perfectly legitimate homes, free and clear of distress, sell at auction all the time. You might also hear that when you sell your home at auction, you have to accept the final bid, even if it is far below the fair market value. This is not an absolute truth, because you actually do have a choice in the matter. You can put a minimum price on the property, but are there repercussions to doing that?
You’ve come to the right place to get the answers, because professional auctioneers with years of experience helping sellers get a good price for their property are here to provide the answers.
No auction company can guarantee that you will get X amount of dollars for your home at auction, but with a little market research, you can get a clearer idea of what your home might sell for when brought to market. And if you sell your home using the “absolute” auction method, which means bidding begins at zero dollars and the high bidder gets the home, there is some risk involved, but there are also rewards. We’ll explain more about that later.
You have the option of putting a reserve or minimum price on your home before it goes to auction, which protects you from losing money, but it also has its drawbacks, especially if the reserve price is published. Our auction professionals will explain more about this, as well.
The “absolute” trend
First, why are more and more auctioneers choosing the absolute auction method? The simple answer is, when no reserve is placed on the property, it draws more people to the auction, which increases the chances of a bidding war occurring. Rick Brock, an auctioneer at the Kansas-based McCurdy Auction, LLC, has personal experience with this situation. He explained that several years ago, he worked with homeowners who wanted to put a reserve price on their home. When it went to auction, the turnout was lackluster and the reserve price wasn’t met, which means it didn’t sell. A year later, the same home went to auction, but this time without a reserve, which attracted twice as many bidders than the auction a year previous. The result was a high bid of $100,000 more than that of the previous-year’s auction.
Whether or not you put a reserve on your house is entirely up to you and your specific situation. For example, if your home is your investment for retirement, going through an absolute auction process where there is some risk involved might be more than you can handle. This is true of many homeowners who feel immense pressure and stress in this situation, which is why auctioneers will not recommend the absolute auction method to them.
If you do decide to put a reserve price on your property, most auctioneers will recommend not publishing the number. Spanky Assister, chairman and founder of Assiter Auctioneers, recommends to his sellers that they never reveal their reserve price to anyone. Rather, make the sale “subject to owner confirmation.” He said his company never publishes reserves, because it can negatively affect the outcome of the auction.
So, the choice is really up to you. If you’re a seller looking to get rid of a property fast and walk away with some cash, the absolute auction method is the way to go. For those of you who have time on your side and/or are risk averse, putting a minimum price on the property might be a more palatable situation.
Find a real estate auctioneer in you area today!