April 13, 2023
Selling a home can be done in a variety of ways, and one option that may be worth considering is selling at auction. In this post, we'll take a closer look at the benefits and drawbacks of auctions, the ins and outs of how real estate auctions work, and why it was the right choice for this Noe Valley home.
Contrary to popular belief, real estate auctions are not just for distressed sales or foreclosures. In fact, they can be a powerful tool for maximizing your return on investment. The auction process differs from traditional real estate sales in three key ways: pricing, format, and a set date.
Firstly, the pricing structure in auctions involves a start price that allows for negotiation upwards with no ceiling. In comparison, traditional sales rely on a list price that indicates the minimum amount that the seller is willing to accept. Secondly, in auctions, all inspections, reports, and disclosures are completed upfront, and the property is sold as-is. Buyers are required to conduct all due diligence before signing a non-contingent purchase agreement. In contrast, in traditional sales, the buyer signs a purchase agreement that may contain contingencies. Finally, auctions have a set date – the auction day – which creates a sense of urgency for buyers to make a decision and informs them that the seller is motivated to sell. This can prevent the home from sitting stale and waiting for offers.
Selling a property at auction has its pros and cons, and the decision of whether to do so certainly depends on the seller's goals and priorities. What's your goal? We'd be happy to share our experience with auctions.
With that in mind let’s dive into some of the pros of Auction Sales.
When considering selling your property at auction, it's important to keep in mind some potential risks as auction fees can be higher than traditional selling fees. For example, the property may not sell if the reserve price is too high. Competitive open bidding can work both ways. It can drive a sales price upwards but also runs the risk of a lower offer if there are few bids and the parties are not aggressive. Timing is important. Successful auctions need to ensure buyers have enough time to conduct thorough due diligence.
To mitigate these risks, it's crucial to work with a trusted real estate agent with experience in auction sales. They can provide valuable guidance on preparing the property for auction with disclosures in place, developing a marketing strategy, and setting a realistic reserve price based on the property's value. By following these tips, sellers can increase their chances of a successful auction sale and achieve the best possible outcome.
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