Auctions Are Often Thought of as "Fire Sales" For Properties in Distress. Is this True?
Until recently, real estate auctions, unlike art and antique auctions, have experienced unfounded negative images in the marketplace. The majority of auctions today don't result from foreclosure of distress situations, but rather are the result of a seller choosing a cost-effective, accelerate method to sell a property. Builders or financial institutions, for example, prefer auction rather than laboring for months or years to sell units of a development one by one. Auction allows the seller to eliminate virtually all long-term carrying costs, passing the savings directly to the purchaser in the form of a reduced price. Auction is truly a win-win situation: sellers obtain immediate cash and buyers purchase properties at fair market value, the price determined by open, competitive bidding.
What Factors Impact the Success of an Auction?
- The seller must have realistic expectations, including a fair sales price, terms and timing.
- The desirability of the property. This includes location, conditions, plus the value of surrounding properties.
- Since a variety of auction methods are available, carefully choose the auction type that best suits the property and the seller's needs.
- A well planned, aggressive marketing/advertising campaign targeted to prospective purchasers is critical to an auction's success.
- Using a recognized real estate auction company or a REALTOR® auctioneer to ensure the auction is conducted in a professional manner and followed-up through closing.
- Making sure that due diligence information is provided to prospective buyers AHEAD OF TIME.
- Preparing the property for sale so it is presented to prospects in its best condition. (i.e.., title insurance, clean-up, financing, etc...)