Selling a House at Auction

Property owners have a number of options for selling their property. First, they can hire a real estate broker to find a suitable buyer. Secondly, they can find a real estate investor to buy the property. Thirdly, they can take a do it yourself approach and place ads online, advertising boards as well as in front of their property. The last option is to sell through an auction. There are many benefits and challenges of selling a house at auction. Keep reading to learn more about these pros and cons.

Learn more about selling a house at auction.

How to Sell at an Auction

If you have ever attended or watched an auction, you may know the drill. The auctioneer simply presents the property to an audience of potential buyers who have registered with the auctioneer. The auctioneer then announces the reserve price and invites bids from interested buyers. When the bidding war starts, the auctioneer simply waits for the highest bid, but can use auction jargon to invite other bidders when the price momentum seems to stall. Once the highest bid has been received and the reserve price has been exceeded, the auctioneer can declare the winning bid after counting to three. At the fall of the hammer, the highest bidder becomes the de facto buyer of the property. However, they still have to complete the payment within the required period to get full ownership of the property.

The Pros of Selling a House at Auction

There are many advantages of selling at an auction. First, if the property generates a lot of interest and many buyers register to participate in the auction, a bidding war can push the price of the property above it's actual market price. After all, there would be many different types of buyers at the auction, including real estate investors, brokers and aspiring home owners. Secondly, only serious buyers will express their interest in buying the property as they will be required to register with the auctioneer and make a deposit before they are given a number they can use to bid for the property. This will save you the hassle of having to entertain jokers who only want to see the property but are not interested in buying. Thirdly, the auctioneer acts as an intermediary to ensure the transaction is completed successfully.

The Cons

Auctions have one major shortcoming the number and type of buyers they attract is not guaranteed. This means that your auction can attract hundreds or thousands of bidders, or just half a dozen buyers. If the auction only attracts four or five buyers, you may not be able to sell the property as some of them may lose interest when the reserve price is announced while others may not be able to counter the highest bid. For the auction to be successful, many bidders must be present. Secondly, a reserve price is normally set. This price is usually a little bit lower than the current market value of the property. For a bid to be successful, it must be higher than the reserve price. This means the seller will take home less money than they expected. Thirdly, the success of the auction depends on the reputation of the auctioneer, not necessarily the quality of you home. In addition to that, some auctioneers normally charge a fee that is much higher than what real estate brokers normally charge.