Getting outside the box

The Auction Alternative - As the real estate market malaise continues to deepen, it is definitely time to try to think and act outside of the box. We all get comfortable within the "box" that defines our own "conventional wisdom." In the current market, we need to break out of the box that defines a sale as a standard real estate listing process. Many sellers are turning to an old familiar process in order to sell — holding an auction.

Now before you start conjuring up those pathetic images from the 70’s of farm families standing around while the auctioneer sells off the farm and all the livestock and equipment, it’s not really like that today (unless, of course, you’re headed to foreclosure already). There are many very good reasons to consider letting a real estate auction company sell your house.

The auction process offers several advantages to the seller -

- The seller stays in control and sets the terms and conditions (and even the reserve)
- The auction separates the real buyers from the tire kickers; and, buyers are financially pre-qualified and have real money in the game.
- The competitive bidding process may end up netting you more than a regular sale
- The seller has a “date certain” when the auction (and hopefully the sale) will take place
- The process takes less time, so the seller is not hassled with showings and open houses for long periods (Note: there will be one or two "buyer preview" dates set to allow bidders to look over the property.)
- There are less post-sale hassles since the sale is “As Is, Where Is, with all faults”. That means no surprises from post-sale inspections or financing issues.

The process does have up-front costs for marketing that are paid at the time the auction contract is signed; but, those typically will be less that the full commission on a normal sale. In an auction, it's the buyer who pays the "commission" (called a buyer premium) to the auction house, not the seller. There is also no guarantee of a successful sale; however, in the end you will get market price for the property or at least know what that is, or that your "reserve" is above the market price. If the auction is not successful the seller is out the up-front marketing money that he/she has paid; so, there is risk there, too.

Auctions aren't for everyone; but, if you really want (or have) to sell and you have at least 30% equity in your property, an auction might be right for you. Auctions also work well for properties that are hard to put a value on, such as large vacant land parcels that could be split or unique properties for which there are no comparable properties in the area. Call me to discuss whether looking into an auction sale might work for you. For more on auctions visit www.themilfordteam.com. I have a link there in the Sellers section of the menu to Real Estate One's newest auction partner - Masterbid, Inc.