What’s The Difference Of Selling Real Estate With An Agent Versus At An Auction?
You might also want to add a few sections that are a bit more positive for selling real estate online at auction. Auctions in the old days for real estate were mostly for distressed properties and properties that were foreclosed on or just to get rid of them fast, so it often had a bad reputation. But these days, there are a lot of houses that are auctioned off that are perfectly fine and not distressed. So the auction industry for real estate is cleaning up its reputation. That doesn’t mean to say that a lot of bad things still don’t happen, but it has become a lot more mainstream.
Also remember that the client is an online auction that wants to get sellers to put up their house, and how buyers come in by it. So we don’t want to make it sound to doom and gloom. You could pitch it that a lot of these things were more previously and have been more addressed in these days. It is safe to sell real estate and auction, and it’s fairly safe to By your real estate at auction, as long as you have done your due diligence.
So maybe rework this one a little bit, you don’t have to rework it too much you can just add more wording to padded out and make it a little bit more palatable for selling at auction.
In this industry, selling real estate at an auction is not unheard of. Selling real estate in an auction can be risky, but I guess “high risk, high reward”. You gotta know the ins and outs, the pros and cons of selling real estate at an auction.
Before deciding what to do, you should see that the answer to that question will be answered with 10 important points below! Better start reading!
So, What Are the Pros And Cons Selling Real Estate At An Auction?
Well, let’s look at a some important things you should know before deciding:
- Pro: Sold Fast With A Professional
- Con: “Real Estate Auctions Are For Worthless Properties”
- Pro: All Work Is Handled By Agent
- Con: “Passed In” In A Day Due To Upset Clients
- Pro: Receive True Market Value
- Con: Potential Buyers Might Not Like The Competitive Nature
- Pro: The Buyer Can Cover Realty Commissions
- Con: Potential Buyers Might Not Sign Up Because Of State Laws
- Pro: If It Doesn’t Sell At Auction, You Can Still Negotiate
- Con: If Bidding Is Slow, You Won’t Get Higher Bids
Pro: Sold Fast With A Professional
Having your property showcase in an auction will provide undeniably great exposure to not just potential buyers but sure buyers which will always turn a sold conversion. This will make you sell the property quicker than selling it the conventional way. Professionals will take care of the appraisals and will provide appropriate analysis on how it can be appealing to the buying market. Auctions often last for a definite period of time, most of them run for 6 weeks. Weeks are considerably faster than listing it somewhere and wait for months and months or sometimes even years. Given that our property is an attractive one, competition in bidding will be at high which may mean bidders would want to spend even more just to get the property purchased. This will mean a higher price for your property’s minimum reserve value. Once a buyer deals a bid, it will be less likely for them to pull it out or change their mind as bidding rules protect the seller in scenarios as such. It means that although you have sold the property fast, doesn’t mean the buyer can also back out or pull out fast too. Bidding regulations just don’t allow those kinds of instances as the auction contract is deemed unconditional. Auctions will let you protect terms and conditions of your own in selling your property like the move-out terms, given that it is considerably alright and within the acceptable circumstances.
Con: “Real Estate Are Just For Worthless Properties”
There’s a connotation that properties for bid are those which cannot or are difficult to sell elsewhere. Potential bidders have that in mind and although the minimum price of the bid will be established, it is not a guarantee that you could sell the property at the price you like because of this stigma. Buyers also have this thinking that if a property is a good one why sell it in an auction when it could be sold elsewhere given the right asking price.
Pro: All Work Is Handled By The Agent
Selling a property requires a whole lot of work and it could be draining at times. Putting it up in auction will make the process easier as the agent will facilitate all the required works with regards to selling your property. This will help you save time, effort and money. This is an ideal set up for someone who is constantly busy with work or business and other things that you do in life. Having it handled by an agent will save you a lot of time off of your phone and driving back and forth to do some paperwork about the sale. That can only mean convenience on your side.
Con: “Passed In” In A Day In A Day Due To Upset Clients
It is important that we know what a “passed in” means in an auction. This will occur at times when the highest price bid did not meet the given reserve price. The property will then be relisted or will still be at the auction in the coming weeks, this might upset the bidders at times. This does not mean you won’t be able to sell the property still as bidders may vary, chances are, if it’s still in auction, you’ll still get the chance of selling it.
Pro: Receive True Market Value
Your property appraisal will be handled by professionals and they will be providing you nothing but real value of your property. This will help you adjust your expectation regarding how much the property will sell. They can provide you with a calculated cost on the renovation cost needed in the property for you to be able to sell it at a much higher value. They can also provide the minimum and the ceiling value for the property given its “as is” condition and the renovated condition.
Con: Potential Buyers Might Not Like The Competitive Nature
You will miss potential buyers that are not into the fast phased process of the auction. These are the buyers who want to purchase property the traditional way. You cannot see them in an auction. They are a somewhat big chunk of the target market that we are missing.
Pro: The Buyer Can Cover Realty Commissions
Most realtors charge around 3-5% of the sale. This might sound small but this could reach thirty to a hundred thousand depending on the actual property price which may be covered by the buyer given that the terms are set beforehand. Do not confuse this with the auction charge which may vary from $2000 to $4000 depending on the auction company you are with.
Con: Potential Buyers Might Not Sign Up Because Of State Laws
Auction law varies depending on which state you’re in. Auctioneers, buyers and brokers often got off with a more complicated set of laws and or rules in purchasing the property. As the auction itself is regulated, customers are required to sign an agreement or memorandum in compliance with the state law. This will limit your potential buyers in the auction.
Pro: If It Doesn’t Sell At Auction, You Can Still Negotiate
Unsold properties will be endorsed to potential buyers where you as the seller can negotiate the price and terms of your properties. This will still give you an opportunity to sell the property to potential buyers. Here, you might want to consider amending the price or some terms in selling your property which can open broader opportunities in selling the property.
Con: If Bidding Is Slow, You Won’t Get Higher Bids
In putting your property in an auction, you can set the minimum reserve price for this, however when the bidding is slow, the price you’ll get may not be far from the minimum reserve that you have set. This will depend on how attractive your property gets into the eyes of the buying public. It is one of the risks you may want to consider.
Selling your real estate property at an auction both has advantages and disadvantages. It will always boil down to how good or bad the property is. Know what your property’s worth and protect it. You can always set the minimum reserve based on the auction’s professional appraisal process, this will secure your income, however keep an open mind to every scenario that could happen, this will help you better manage your expectations. It is also helpful to equip yourself with adequate knowledge in terms of auction rules and law before signing up with them to acquire a smooth process in selling.