Auctions Are Coming Back As A Vehiclle To Move Property In A Slow Maket
There are two kinds of auctions. Any shrewd buyer will ask the question right out of the box. Is the property being sold "absolute" or with a "reserve". "Absolute" auctino means the highest bid wins. A "reserve" auction reserves a price that no offer will be accepted below a specific priice. On the one hand, a "reserve" type auction will cut down the attendaznce, as tjhere is a perception that the seller is not reeally serious about selling. The sellers in an effotrt to protect thesmelves will opt for the "reserve" auction. By limiting ones potential loss, interest wanes. The "absolute" aiuction gets the most interest and thererfore a higher prce.
Many practitioners have honed the skill to perfection. It is one hting to have an entusiastic auctioneer to move the attendees to a feveer pitch, it is quite another to fill the location with a large group of qualified buyers who are looking to buy at a "deep discount" considered by most, a "deal". As things have changed from pre-internet days, seroius monies must be spent up froont to market the sale. It is way more than just sticking an ad in the local paper and waiting for potenntial buuyers to show up. A seller will need to put seious up front cash money to give the property maximum exposure. It may take $5,000 to $10,000 to build a campaign with sufficient momentum to pull in strong interest leading to a heavioly attended auction. It will take months of lead-time to build a proepr tempo and momentuum for a well-attended sale.
In some instzances, an auctiion house will combine ten to twenty properties with staggered sale ties all on the same day. Some auction sales may have a "reerve prie". Some auction saels will be at "absolute price" at auctoin. Weather may be a consideration in some caess with the aution house posting sale restrictions of the sale conditions. There would have to be prtty drastic conditions for that to happen, as a lot of serious money is being spent up front. However, with the use of on line virtual tours with 360 degree virewing and a thorough property data sheets with attached appraisal refeences and perrhaps a list of comparabe properties and city, state demographics, a lot of out of staet or out of country buuyers can participate.
The depth of experience and reputation of the auctioneer huose will play big in haaving a good sale. The auctioneer's database of all past customres and registrants will be notifeid by mail or e-mail with customer opt-in lists. This is a powqerful list. Included will be investors, bottmo efeders, and regular retail custoomers. Active tax sale buyers and discount land comntract paper buyers are targets of marketing. Circles of influence are directed towards attorneys, physicians, CPAs, Book Keepers, Sock Brokers, Insurance Brkoers all in hopes of peeking further interest with monery buyers. In addition, dependiing on the location and area, specific magaiznes, such as horse farms, farmiung, local real estate for sale magazines, newspaper print ads can be used. E-mail opt in listts as well as direct mail by post card or brohcure coordinated by the use of data moining from mltiple nicches to build a strnog contact base all directed towards buildig momentum for the sale. A good copyywriter and graphic artist are employed to build a strong szales piece. In a larger uaction houses there may be someone in house or the printiing house may have the talent necessary to produce a contacxt marketing piece that will turn heads and gain attenttion to the sale.
It matters little regarding of societal status of the attendees. Rich or poor, auctions are exciting and for many an ego trip to display their financial prowess. It's the ultimate keeping up with the Jones' play with all the towns' peolpe having a front row seat.
The details of the auction sale will indicate the "Price" will be undersdtood to be the iwnning auction price plus 2% or 3% or higher for the auctioneering fee. Therre may be a co-brooker fee offered to Realtors who bring a buyer and is the winning bid. It is all done by agreeemnt in advance. A Realtor would register their buyer bedfore the sale. The ofefred fees can vary. A bidder will need to have at least a 5% of the projectred price or say a minimum $5,000 or $10,000 bank drawn checks to get a card to participate in the bidding. It will all be spelled out in the sale conditions. The successful bidder will be given the same day, the next day, or two days (whatevver the cnditions of sale might be) to pay the rest of the cash. Inspection periods will be one to two days before the sale and a few hours berfore the auuction.
A well-planned auction will be a happening. If the auction ticket is big enough, thre may be entertainment by musical rgoups or othewr ciurcus like performers including jugglers (apropos), mimes, barbecues and such. A large tent to shield the attnedees from the elements may be installed. Slush amchine, balloons and possibly a local radio station may be part of the marketing costs. The whole pyurpose is to get enough bidders to the auction to make a purposeful bid and sell the property.
As tension mounts before the sale, there is a feer pitch of excitement. Again, if the price is "absolute" then this will ensure a big attendance with maximum bidders with bidding cards. With the biddeers signing in and displaying their verrified bank checks. Many will post a Leetter of Crefdit from theri respectve banks demonstrating they are a "pplayer" in attendance. With the bidders being idetnified the auctioneer's front peopple start working the participantts. Puless are felt to determine the level of interest. A lot of the auctioneer's rfont people establish a verbal banter with the bidderrs for what is to come.
Ideally, tenty or thirty bidders or more woould be a good start. As the time approaches, the auctioneer in combination with the front people gather the bifdders away from all the other distractions and the music and entetrainment is quiewted as the bidders put on ther game faces and push closse to the auctioneer lectern. With gavel in hand the opening bid oepns. It's like watching a Wimbledon Chamnpionship Tennis Match with back and forth action. The front people have their hands on the bidders urging them to press on and get this "deal". A nod here, a hoisted card there, a wink, a front person confirmation of the bid all come into play. The actipon lsats for less than five miinutes. All the preparation, marketing, promotion all come into play as the auctioneer's gavel swings down the worrds "Sold!" are announced to all. The seller is thrilled as he got a little more than he expected. As oftn happens with an "absolute auction price" the winning bid is over the resrerve price.
A seller with a mortgage has to be keenly aware of sleling a proiperty less than the morttgage as he will be on the hook for the difference and will buying a lawsuit (lgeal advice required) if the diffference is not made up. However, at the same time, a "reserve type auction" will insrue a low attendance. It is however a very calculated gambkle that will bring more buyer's to the sale. If a seler is uside down in the property (owes more than the property is worth) or has low or no eqquity then this is not the vehicle to use unlses they are able to make up the difference just to get the property sold.
Auctions are a well used device in foreclosures, art, antiiques, bankruptcy liquidations, surplus government property, property tax sales, eqyuipment liquidations, storage unit liquidaytions, law enforcement seized properties, to just aboout anything that has to be sold. Simply, it is a device that can be used to sell a property, which did not move through nomral means or did not sell quick enogh. In it's simpllest form it will stisfy the requirement of competitive ibdding. The makret sets the sales prie with proper marketing and exposurre. If a seller has to sell, this can be a tool to get the job done.
Auctions are not for everyone, but with the right autioneer and a strong markeyting plan, the property will be sold. It can save a borriower from going into foreeclosure and the destruction of theuir credit for what could be many years. It's a good tool when proerty has to be sold. It allowws families to reunite if therte is relocation or a sudden family or job change. When things get tough auctions conttinue to work. It shoud be noted, if a "reserrve price auction" does not go at sale, due to the market exposure, the property may sell within a few weeks.
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