You have a piece of real estate to sell. You want to do it fast ... and at a fair price. What if you could have a meeting of several would-be purchasers, eager to duke it out for the privilege of plunking down earnest money to buy your property as is?
And what if that meeting could be held less than 30 days from today?
It sounds like a sellers dream, but its the reality of the auction method for selling real estate. And its becoming more popular.
A recent study by the National Association of Realtors indicates that within the next five years, one of every three properties will be sold by auction. To legally auction real estate in Ohio, you must have an auctioneers license, as well as a real estate license.
I once thought of auctions as a means to sell distressed properties for distressed owners, says David Dworken, founder of Dworken Realty Inc. In actuality, selling by auction is simply another way of marketing. The fact is that auctions can sell with great speed and a rapid sale most often works to the advantage of the seller ... and the buyer.
The auction process begins with a meeting to exchange information. The property is inspected and pertinent data reviewed. Getting the best price means starting with a reputable firm. A good auction firm:
- specialize in real estate auctions;
- is a REALTOR firm;
- provides references;
- has experience and proven success selling similar properties;
- is able to clearly present fees and services in a written proposal;
- has a database that supports a direct mail effort;
- explains the different auction types, as well as the pros and cons of each to the seller;
- develops comprehensive due diligence packages;
- arranges for financing;
- holds bidding seminars, if appropriate.
The auction is publicized in a variety of ways including: newspaper advertising, direct mailing(s), open houses and hundreds of phone conversations with would-be buyers.
Not all properties best lend themselves to sales by conventional means. Some are best served by an auction sale. If your property is a good candidate for auction, here are some advantages:
- From time of listing to sale can be less than 30 days.
- Property is sold as is, eliminating costly spruce-up expenses.
- A rapid sale saves holding costs.
- An auction creates excitement and urgency to buy.
- Property benefits from maximum exposure.
- Buyers know the seller is truly committed to sell.
- Buyers come with financing pre-arranged.
- The seller can avoid all or part of the sales commission.
- Minimum bids can be established.
- Personal property can be sold at the same time.
- The negotiation process is avoided.
- Sales occur at true market value.
- The auction method works well in a strong or a weak market.
- Sales are final unless the seller cannot furnish a clean title.
After the sale, the auction firms responsibilities dont end. The company should:
- have regular communication with the seller about the status of the closing;
- attend to any legalities of the sale;
- sell any remaining properties through negotiated sale;
- provide an auction report to the seller.
Norah Lynne Brown works for Beachwood-based Dworken Realty Inc. The staff specializes in conventional and auction sales; leases of commercial, industrial and investment properties; and sales of businesses and private residences. Services include consulting, financial analysis and evaluation. For more information, call Dworken Realty at (216) 591-1899 or (888) 525-3076.