Top Reasons to Sell a Property Using the Auction Method
If you’re interested in selling a property “as is, where is,” the auction method is typically the way to go. Instead of marketing a property with a set listing price in a negotiated sale, some sellers opt for the time-sensitive format for a variety of reasons.
Auction sales can work in the seller’s favor by giving him or her more control over the process. After all, the seller gets to set the terms and conditions of an auction sale. Selling a property at a true market value is arguably most feasible using the auction method, and a property can sometimes end up selling at a higher price in an auction than in a negotiated sale. Three of the biggest auction format upsides have to do with timing, exposure, and financing.
Top 3 Reasons to Try the Auction Format Instead of a Negotiated Sale
The auction method speeds up the process. Because an auction is a time-sensitive sale with a set date, this format creates a sense of urgency among potential buyers. Compared to negotiated sales, auctions stimulate a need for informed buyers to act fast, encouraging competition. It may be assuring to the seller, who knows exactly when the property will sell. In negotiated sales, the seller has no idea when the sale date will arrive – it could be any number of weeks or months after the property is listed. The accelerated timeframe in the auction method means the seller enjoys a 30-45 day unconditional all cash closing. To top it off, all due diligence, inspections, and testing is performed prior to the sale.
The auction method increases exposure. Using the auction format ensures an aggressive marketing program, which is accelerated due to the limited timeline leading up to an auction. This accelerated marketing strategy can leverage the seller’s advertising investment 10-20 times in a multi-property event. Since auctions involve a large number of pre-qualified prospects, this aggressive exposure in an auction marketing campaign means the property is advertised to people who are truly serious potential buyers.
The auction method cuts costs and may increase value. The speedy process involved in the auction method reduces carrying costs, which include taxes and maintenance. Auctions also require potential buyers to pre-qualify for financing, meaning the sell-side agent does not have to waste time (and money) dealing with those who are not “true” potential buyers. Compared to negotiated sales where the asking price is essentially the highest amount the seller will be able to get for the property, the sky’s the limit for properties sold through the auction method.
Over all, auctions are worth considering, especially if the seller wants an accelerated timeframe, increased exposure to qualified prospects, and certain financial upsides that the auction method can provide.
SVN Auction Services is a provider of date-specific sales and special asset solutions. It encompasses an elite group of local and regional auction Advisors throughout the United States who specialize in areas such as foreclosures, tax sales, multi-properties, receiverships and bankruptcies. SVN Auction Services offers the industry’s most comprehensive spectrum of auction solutions—from rapid asset resolution and 30-day countdown asset sales to wide area and high impact/high promotion events. As part of one of the most recognized and reputable commercial real estate firms in the industry, SVN Auction Services is supported by SVN International, which features more than 190 locations serving more than 500 markets. For more information, visit SVN Auction Services.
This blog post was adapted from the SVN | Menish Auctions website.
By Bill Menish, CAI, AARE, BAS