Auctions Northwest

It is hard to turn on the television nowadays and not hear a news article describing how housing starts are down again or that foreclosures are at record numbers or new home sales are at 4 year lows. The housing sector has definitely taken its lumps over the past year. Now with the announcement last week that one of the largest sub prime lenders in the country is teetering on the verge of bankruptcy, there is a chill in the real estate markets and people are very concerned about the future value of their properties.

The typical method of selling a home via a real estate agent is just not working as effectively as it did in the past. Houses are staying on the market much longer and price decreases are almost the norm. Even with all of this price cutting, home sales are still way down from previous years. The old familiar way of doing things is no longer getting the results that people expect.

Real estate auctions on the other hand are enjoying a surge in popularity. It appears to be a match made in heaven. Real estate is the fastest growing segment of the auction business, and auctions are the fastest growing segment of the real estate business. Some of the reasons that real estate auctions are fast becoming a preferred method of selling a property quickly are:

Reason #1: It’s a Quick Sale
An auction affords property owners the opportunity to dispose of property now at today’s prices, rather than tomorrow’s prices. Time is money. Depending on reinvestment rates, $195,000 or even $190,000 today is likely more valuable than $200,000 next year.

Reason #2: High Carrying Costs are Avoided
All property incurs costs during its private negotiating marketing period — debt service, real estate taxes, insurance payments, maintenance and sometimes security. All too often, the carrying or holding costs of real estate during a private negotiated marketing program won’t be recovered in a higher selling price. In effect, the sooner a property sells, the greater the bottom line dollars in pocket for the seller and/or greater the savings that may be passed on to the buyer.

Reason #3: Property Market Value can be Demonstrated
Instead of relying on the appraiser to assigning an asking price, the auction process demonstrates the value of the property to sellers and potential buyers. Selling property by the private negotiated method, you may wonder whether you couldn’t have bargained higher. But if the property is sold at auction, the proof of market value is in the process itself. Moments before the final bid, another serious buyer bid just a few dollars less. The selling price is truly market driven.

The bottom line is, real estate auctions are a very effective way to sell a property quickly at market value. If you own some real estate and you would like to sell it quickly, real estate auctions might be your best bet in today’s uncertain markets.

• Seller pays all marketing costs

• Provides a list of ready and qualified buyers

• Increases profits

• Offer clients and customers new selling and purchasing options

• Increase market share and revenues; new business opportunities are added

• Enhance company’s image

• Develop your own market niche; able to offer new products and services other brokers/agents are not providing

• Exposes the property to many potential purchasers

• Auctions appeal to people; it brings them in to look at all the listings you hold, not just the auction listing

• Auctions cause referral and return business

• Broker/Agent/Auctioneer know what day property will sell, when it will close, and day paid

• Learn new business techniques and skills

• Purchase property at fair market value

• Never has to worry about paying too much

• Eliminate sometimes long negotiation periods

• Reduce time to purchase property

• Gain confidence as they compete

• Do not have to worry about contingencies because purchasing and closing dates are known

• Feel better about a purchase; just knowing there is a contending bid just one increment under purchase price

• Buyers know property owners are motivated to sell

• Buyers know property owners sell at lowest price possible

• Buyers can receive favorable financing

• Buyers set their own purchase price

• Never has to worry about selling too cheap

• Offers the seller another option

• Creates competition among buyers; auction price can exceed the price of a negotiated sale

• An auction generates excitement and heightens buyer interest

• Exposes the property to a large number of pre-qualified prospects

• Requires that potential buyers pre-qualify for loans

• Property is sold as is, where is and how is without contingencies

• Accelerates sales; the property can sometimes be sold within three weeks of listing

• Eliminates high seller carrying costs; (such as interest, taxes, maintenance)

• Auction brings interested buyers to a point of decision; they must act now or lose an opportunity to purchase

• Auction is a true market forum; the highest buyer pays the lowest price a seller will accept

• A seller knows exactly when the property will sell

• A seller sets the terms and conditions of the sale, maintains control of the property throughout the auction (depending on auction type), and actively participates in the sale process

• Auction reduces the time the property is on the market

• Auction eliminates numerous and unscheduled showings

• Auction takes the seller out of the negotiation process

• Auction is an aggressive, advance marketing program that increases potential interest in and awareness of a property

• Seller is able to obtain liquidity

• Seller is able to move on to other investments and free up capital

Many situations occur that are tailor-made for a real estate auction, but most, if not all, would fit under the category “time is of the essence.”

Property A is sold, and on the strength of this sale, your client purchases Property B. Now sale A develops problems in escrow and the sale cannot close. The client is now in a state of hysteria since his only hope of closing on Property B in 60 days is by closing on Property A. What do you do? Auction Property A and arrange a sale date well in advance of the closing date on Property B, stipulating that part of the terms and conditions of the real estate auction is a quick closing. This can only be accomplished with a real estate auction.

A type of situation which dictates the advantage of a real estate auction is the high divorce rate and the need to dispose of the real estate quickly. Often neither party can afford to hold a property that they previously owned as husband and wife.

When a partnership dissolves, the situation often demands an immediate sale of the assets, including the real estate. Private negotiated marketing cannot guarantee a sale within a set, short time period. A real estate auction can.

Heirs to an estate that involves real estate are usually highly motivated for a fast sale. Most states encourage a real estate auction as a method for generating the highest price in the shortest period of time. Illness, or the need for immediate cash, or the inability of the owner to hold and maintain the real estate is another reason you should recommend a real estate auction. Holding costs can be crippling. All too often, the carrying or holding costs during a private negotiated marketing effort won’t be recovered in a higher selling price. Instead the price is reduced. Therefore, the sooner a property sells, the greater the bottom line dollars in pocket for the seller.

An exchange being held up waiting for a buyer on one of the legs - auction it. The real estate auction can also work especially well in a “Bull Market”. The law of supply and demand, where the demand exceeds the supply, is an ideal market to expose the real estate to competitive bidding to get the maximum return. The real estate auction is highly desirable in overbuilt or stagnant markets, where no reading exists on how low prices will fall or how long the market will stay overbuilt.

The private negotiated method and auction marketing method are different. A real estate auction can most generally guarantee a sale within a short period of time, and the attention is directed to the property being auctioned. Private negotiated marketing can’t accomplish this.

Clearly, real estate auctions offer owners of all types of real estate advantages that are not available with private negotiated real estate firms.

All of us in the real estate profession are salespeople first and foremost. Let’s forget for a moment the fancy titles and diplomas we have earned during our years in the business. The bottom line of success in our profession is still determined by our ability as salespeople. We constantly look for sellers so we have more listings. Our next step is to find the buyers.

A professionally managed real estate auction is a method of marketing that will find the buyers crawling out of the woodwork, and it is this benefit that will enable you to gain additional sales by offering your clients the real estate auction marketing option.