When it's time to sell a house, most people follow an established pattern. They get their paperwork in order, contact a home inspection company and Realtor and set a reasonable price. While that traditional method works for plenty of people, it's not the only option.
Real estate auctions are commonly associated with foreclosed homes and other pieces of property that need to be sold quickly, but they are also a viable option for homeowners who want to avoid the negotiation process and get their homes off the market.
With spring on the horizon, you might be considering selling your home. If that's the case, here are some tips to help decide if an auction suits your situation:
Speed takes priority
A real estate auction takes a home off the market fast. If you sell your property traditionally, it can sit for months without being sold. Many factors can contribute to this situation, but an improperly set price is chief among them. Auctions eliminate this possibility. Your home can sell for it's true market value on the appointed day, and you don't need to waste time and money keeping a home on the market for months at a time.
Closing is made simple
The bidders at an auction are often pre-qualified for financing. These individuals will need to put down 10- 20 percent of the purchase price in cash on the auction day and forfeit that money should they fail to close within a 30- to 45-day window after the sale.
All of this contributes to a hassle-free closing for both the buyer and the seller. All the negotiation over price happens during the auction itself rather than in a dance of offers and counteroffers.
Your house will get serious exposure
The upfront costs and fees of an auction may be more than a traditional sale, but this is often ameliorated by the speed of closing. The increased price allows the auction company to advertise the auction, and exposes your home to more people for the big day. Having a large number of bidders is crucial to a successful auction, and modern real estate auctions often increase the number of bidders by offering live online bidding options in addition to the traditional in-person action.
The seller retains control
Some sellers worry that selling their home at auction will result in the house selling for much less than it is worth. While this is technically possible in what is known as an absolute auction, absolute auctions are somewhat rare. It's much more common for the seller to ensure a favorable sale by setting a minimum or reserve bid.