Auctions becoming a marketing tool
By Louise Bolger
sun staff writer
Auctioning residential property has always had a negative
connotation attached to it. However, as sales continue to
be soft in many real estate markets, auctioning property has
become less of a last ditch effort and more of a marketing
There are a variety of reasons a seller may decide to auction
a property rather than peruse conventional selling methods.
If a sale needs to be achieved quickly for reasons ranging
from shifting financial positions to government liens or a
swift sale required to settle an estate, an auction could
be the solution. An auction is really an accelerated marking
process, which uses a compressed time period to market the
Auctions are advertised and promoted by the qualified auction
companies handling the sale. Pre-auction open houses are conducted
allowing adequate time for inspection of the property and,
just like any other form of sale, repairs and cosmetic improvements
should be made. Local real estate brokers are encouraged to
bring qualified buyers to the auction and will be paid a pre-arranged
commission if their client is the successful bidder.
Terms and conditions of the auction should be clearly indicated
on any signs, flyers and advertising material prior to the
auction. There are basically two types of auctions
an absolute auction and a reserve auction. An absolute auction
is where the property is sold to the highest qualified bidder
regardless of price with no limiting conditions or amount.
The seller may not bid personally or through an agent and
there is no reserve. A reserve auction is one in which the
seller reserves the right to establish a reserve or upset
price, setting a minimum price that the seller is willing
to accept. The seller also reserves the right to withdraw
the property at any time prior to the announcement of the
completion of the sale by the auctioneer. Be aware if the
property is being auctioned as is without warranties as to
the condition and/or particular use of the property.
In addition to commission paid to the auction company and
any real estate brokers, there is frequently a buyers
premium added to the high bid in the form of a percentage
or a flat fee which determines the total contract price to
be paid by the buyer.
The amount of deposit money required and in what form the
deposit will be accepted by the auctioneer should also be
published with the marketing material.
Buying and selling at auction is not for the novice real estate
investor. No where in the real estate industry does "caveat
emptor" (let the buyer beware) become more important
than when negotiating the auction process. If youre
a seller finding yourself in the position of marketing through
an auction process, fully understand the auction listing agreement
relative to commission and responsibility of the auctioneer.
If youre a buyer, get your feet wet by attending real
estate auctions as a spectator and reading local and national
newspapers that advertise auctions. The National Association
of Auctioneers website, www.auctioneers.org, will give
you a crash course and advice on finding a qualified auctioneer.
And if you would like to attend a property auction in your
own backyard, American Heritage Auctioneers will be conducting
two in Bradenton Beach on Feb. 17. You can check out their
website for more information.
Auctioning as a marketing tool? It may not be for everyone,
but whatever works in a tight market works. Gentlemen start