Is an Auction the Right Move For You?

All across the country, houses are being auctioned off thousands at a time. This is because they are distressed properties, bank owned, tax foreclosures, or the homeowner needs to sell quickly. Watching as hpomes receiver multiple bids from cash buyers can make even the most jaded seller wonder- is an auction the right move for me?

And the answer is- it depends. Auctions typically suit the sellers who are willing to accept a price far below the market price who are looking to sell fast. As for the sellers who do not need to sell fast, they have many advantages; and here are five reasons some sellers prefer auctions.

1. An auction is an event- it can be marketed easily.

2. Urgency for Buyers- the auction date creates a deadline for buyers to take action.

3. Seller Control- Sellers can set a reserve price and still remain in complete control.

4. Few or No Contingencies- There are hardly any if any at all conditions of an auction sale.

5. Fast Closing- Auction sales are typically closed within 30-45 days.

     Real estate auctions are very similar to a regular auction, but there are a few key differences. It begins with a homeowners wanting to sell quickly and at a discounted price. Next, the property is analyzed for its market value, which is a standard appraisal. It can also be done using the county tax value, or a competitive market anaylsis. Once the real price has been established, the seller and the auctioneer agree on a price that will attract buyers. Lastly, the seller and the auctioneer agree on the type of auction that will most fit the sellers needs. Here is a list and brief discription of different styles of auctions used to sell real estate.

Absolute Auction- This auction is sold to the highest qualified bidder. This means that if only one person who bids $100, gets the property.

Auction with Reverse- This auction reserves the right for the seller to decline any or all bids. If a seller sets a reserve price of $200,000 and someone bids for $75,000 they can decline that bid.

Ballroom Auction- This auction normally takes place in a meeting room facility where more than one property is pooled together and sold in a group.

Bidder's Choice- With the approach the the winning bidder wins the right to choose a property, or properties, from a group of similar items. This is often popular with selling building lots, and condominiums.

Caravan Auctions- This involves a series of on-site auctions advertised through a promotional campaign, and the properties are really close together. The seller and auctioneer travel to each property and have bidders follow them.

Foreclosure sale- This is when a lender canot collect on a mortgage or loan and has asked a court to allow the sale. this type of sale is a great opportunity for investors to secure property since the lender is trying to recover as much of the loan as possible.

Minimum bid auction- this type of auction is when the auctioneer will accept bids at or above the disclosed price. The minimum bid price is always stated in the brochure, in advertisements, and always announced at auctions.

Sealed bid- This is a type of secret auction in which bids are submitted and viewed at a different place and time. This is not a true auction in which it allows for competition to out bid the other. THis auction works out best for the seller because it forces bidders to place their best offer on the table.

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