Auctions offer numerous benefits over traditional real estate transactions:
* Auctions generate a form of competition not duplicated by traditional real estate marketing. During an auction, each bid not only negotiates the price up, but also reinforces the market value of the property. The auction atmosphere generates excitement that isn’t matched by blind bidding wars in traditional real estate sales.
* You set the minimum price. While buyers determine the final purchase price, as a seller, you are in control of the minimum price you’ll accept. You set this minimum, called a reserve, prior to the start of the auction.
* Auctions are time limited. When you put a home on the market, you have very little control of when the property is actually sold. Auctions give the seller control over when the property is sold, and provide the buyer great incentive to act.
* Commissions are paid by the buyer. In an auction, there is an advertised “buyer’s premium” paid by the buyer, above and beyond the winning bid. For example, if the buyer’s premium is 6% and the winning bid is $200,000, the buyer also pays the $12,000 buyer’s premium. This premium is the auctioneer’s commission.
* Auctions are carefully planned. Successful auctions are no mystery or accident. When led by seasoned professionals, auctions are effectively promoted and targeted to known audiences of interested buyers. Auctions are advertised through multiple channels (mail, internet, traditional advertising, etc.) and items are professionally staged to promote the highest bidding.