Purchasing or Selling a Home through a Real Estate Auction
A real estate auction is an intense, accelerated marketing method of selling real estate property through open-cry, competitive bidding. These auctions help sellers because it makes sure buyers come prepared to buy, assures the property will be sold at true market value, and this quick disposal reduces long-term carrying costs including taxes and maintenance. They’re equally beneficial for the buyers as well because the smartest investments are made when properties are purchased at fair market value through competitive bidding. Lastly, realtors benefit from this type of sale because it helps them generate a list of ready, qualified buyers. Let’s take a closer look at some of the logistics of a home real estate auction.
Selling your home via auction
Stereotypically we think of a small group of investors in a courthouse bickering over numbers when we think of “Real Estate Auctions.” However, it’s completely legal in the United States to sell your own property yourself without the use of an auctioneer, real estate licensee, or attorney. As long as you didn’t acquire the property for the purpose of resale, the owner can auction off their own property. Doing this virtually/online during a time like this when we’re faced with restrictions due to COVID-19, may be your safest option.
If you do plan to do it all yourself— it’s your own responsibility to market and sell the home—whether it be online or in person. One way to increase your home’s visibility for a self-conducted auction is to use “for sale by owner” listing sites and include the particulars – who is eligible to bid, how and when they can bid, and when the sale must be finalized. For instance, you’ll probably want a deposit equal to a down payment and a mortgage preapproval letter or proof of funds to close. You’ll set the time and terms of the auction – live bidding onsite, online bidding, or a combination. You can even broadcast your live auction online.
Another, more popular option is to hire an auctioneer or realtor to assist in the process. You can find quality auctioneers through the National Auctioneers Association, which maintains a database of member auction professionals and can match you with a provider for your home. If you have a real estate agent representing you, his or her company might use a preferred auction house or site.
Types of real estate auctions
There are three common types of real estate auctions:
- Minimum Bid— The auctioneer will accept bids at or above a published minimum price. This minimum price is always stated in the brochure and advertisements and is announced at the auction.
- Absolute Auction— The property is sold to the highest bidder, regardless of the price.
- Reserve Auction—The seller has the right to review the bids and accept or reject the highest offer within a set period of time.
Finding a home auction
One of the best ways to find a home auction is by searching through direct multiple listing services. These county databases offer a wealth of useful information about properties up for bid including photos, occupancy status, and leases. It may be helpful to check out the online house auction options as well, as they continue to grow in popularity. You can use sites like Hudson & Marshall, but stay cautious when looking on websites like these since they may not always provide every piece of information.
Whether you’re purchasing or selling, it’s important to show up to the listing well educated. Be informed about the property, know who you’re bidding against and have the right people in your corner who know how to go about the process. We hope this blog has helped make your experience amazing!