Choosing to auction a house in a challenging real estate market is probably the best way to get a sale. It is undoubtedly the fastest way to get a sale if you are under time pressure. With appropriate advertising, a fair crowd can be generated on the sale date. Some will merely be curious, but there will usually be several in attendance looking for a bargain and prepared to buy. An experienced auctioneer can create a buzz and stir up tremendous interest in your property. If there are two parties bidding, the auctioneer will try to get them to bid against each other and drive the price up. There are two types of auction: absolute auction and auction with a reserve.
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Ask friends or family members to recommend a good auctioneer. Look in the phone book or online for the names of local auction companies if no one has a recommendation. You can spread your search beyond the immediate vicinity since auctioneers are willing to travel at least an hour in many instances.
Talk to several auctioneers and find out what their advertising strategy will be, and find out how much they will charge you. Look at their experience and their track record. What is their percentage of successful sales?
Set a sale date. Get your house ready to show, since the auction company will probably schedule several open houses before the sale date. Potential bidders will be in attendance. A little elbow grease or some fresh paint may be appropriate.
Set your reserve price. This is the lowest price you are willing to sell your house for, taking into account your expenses. You may want to consult a Realtor, but in any event, do your homework.
Be somewhere else on the day of the auction. You are protected by your reserve figure.
Tips and warnings
- Do some advertising yourself. Play up the good aspects of your neighbourhood and schools, for example. Try to attract potential homeowners to the sale. Typically, someone who wants your property to live in will be willing to pay far more for it than an investor looking for a bargain.
- Never put your property up for absolute auction. Always set a reserve. It is far too risky to chance an absolute auction because whatever the highest bid is, that is what you will get, minus the auctioneer's commission and your expenses.
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