| Selling Real Estate through Auction
Auctions offer a fast-paced way in determining what price the market brings for
your property. With the combination of solid pre-sale marketing and the
auctioneer's ear-catching chant, you could have enthusiastic, attentive buyers
competing to purchase your property. Often, items sell for far more than their
In comparison, placing an ad in the classifies, or posting a “For Sale By Owner”
sign, may garner only a lukewarm response or “tire kickers” just looking. It may
take months before you finally sell your property, and even then you may have to
accept a price much lower than you had hoped.
But holding an auction takes a bit more time than simply contacting an auctioneer
and collecting the cash after the sale.
For you, it means determining if your property is right for auction and finding and
contracting with an auctioneer that meets your needs.
For the auctioneer, it means marketing your merchandise, preparing and
conducting the sale, and tallying and dividing the proceeds from that sale.
Finding an auctioneer is easy. Hiring the right auctioneer takes a little more
effort. You will want to weigh several factors carefully before signing a contract.
Price should not be the only determining factor in making your decision. You
should also consider:
Auctioneer Specialty. Many auctioneers specialize in only a few types of auctions.
They will best know the market; the value of your property and how to attract
the buyers most interested in your property.
Experience. Auctioneers can conduct anywhere from a few dozen or over 100
auctions in a year. Seasoned auctioneers know the market and know how to get
the best price for your property.
Referrals. Auctioneers have plenty of success stories to share. But don't just take
their word for it. Ask former clients for their thoughts on their sales.
Licensing. Many states require auctioneers meet professional licensing
requirements. Municipalities may also require auctioneers have permits or
Professional Affiliation. Members of the National Auctioneers Association and
state auctioneer associations keep abreast of their respective specialties,
regulatory requirements and changes in your market. More importantly, NAA
members are governed by a Code of Ethics, which ensures professionalism and
protects both you and the buyer.
Reputation. While less tangible, an auctioneer's reputation is crucial to the success
of an auction. This is a blend of experience and character. An auctioneer who is
trusted and respected in their community will more likely attract a devoted group
of buyers willing to attend and bid at their auction. Talk to former clients and
people who attend auctions frequently.
If in doubt, ask questions. What type of auction is best for my property? What
types of services do you offer? Where will the auction be held? How soon will I
receive the proceeds from the sale? Learn what you can now to avoid any
Be prepared. The auctioneer will have some questions for you as well. How soon
must your property be sold? Why are you selling now? Have you tried selling
before through other methods? While you're trying to choose an auctioneer, the
auctioneer will be determining if they can meet your needs and get the best price
for your property.
Once you've made your choice in an auctioneer and determined the services you
want, you'll cement the partnership by signing a contract. The contract will spell
out your responsibilities, the responsibilities of the auctioneer, commissions,
expenses you'll pay and when you'll receive the proceeds from the sale. Read the
contract carefully and make sure you know the details of the contract before you
sign. If you're unsure before you sign, ask questions.
Auctioneers boast they can sell just about anything for a tidy profit. After
researching your property, an experienced auctioneer can determine its value,
but it doesn't hurt to have your own ideas about your property's value.
So how much is your property worth?
It depends upon the market for your particular piece of property. Some
commodities, like real estate, depend largely upon the geographical area and sale
prices for similar properties. Other, more specialized commodities, such as
manufacturing equipment or heavy equipment, will attract smaller groups of
buyers across a much larger area.
It also depends upon the condition of your property. Knowing the age of your
property, the manufacturer, the types and extent of repairs and keeping records
of regular maintenance may help determine value.
It doesn't hurt to conduct your own research by visiting stores and consignment
shops, reading classified ads or by checking web sites for property similar to
yours. While you are conducting your research, you must make sure that you own
the property. This is particularly true of real estate. Without a deed or title to
your property, it will be very difficult to sell your property at auction.
Conducting an auction requires far more than placing items on the auction block
and collecting money. Before you finalize an agreement with an auctioneer, what
can you expect before and on auction day?
Before, during and after the sale, your auctioneer will be juggling many duties:
Marketing. Your auctioneer will need to generate interest in your auction, and the
best way to get the word out is advertising.
Depending on what you're trying to sell, the auctioneer could use a blend of
newspaper ads, radio spots, ads in newsletters and specialty magazines, custom
brochures, direct mail pieces and sales bills.
The Internet now plays a significant role in marketing upcoming auctions. Many
auctioneers post details about upcoming auctions on their web sites, or they could
use auction lists on other auction sites, such as the National Auctioneers
Association's Find an Auction function.
Finally, some sophisticated auctioneers develop email lists of registered buyers
who are interested in specific items that are offered for auction. They may use
that list to generate interest in your auction.
Type of sale. There's more than one type of auction, but which one is best for
Absolute auctions set no minimum amount for a piece of property, despite its
appraised value. For example, if a car is appraised at $600 but only garners a
high bid of $550, the high bidder walks away with a bargain. Likewise if the car
sells for $650 or more, you benefit from the greatest advantage of an auction—
the market determines the value.
Reserve auctions allow you to set a minimum amount you're willing to accept for
your property. That amount will not be disclosed prior to or during the auction.
You have the right to accept or reject any bids at a reserve auction, and you can
remove the property from consideration before the auction is completed.
There are a few other details your auctioneer will handle, such as absentee bids or
proxy bidding. Also, some auctioneers use the Internet to accept bids, through
email prior to or during the auction, or by streaming video with the ability to
accept bids in real time.
Preparing items for sale. After inspecting and appraising your property, your
auctioneer may suggest minor repairs or maintenance be made to increase the
value of your property. For example, if you're selling a house at auction, painting
the exterior or cleaning the lawn may make it more saleable. It could be your
responsibility to complete these tasks or the auctioneer may do them on your
Sale Day. Your auctioneer will be plan and execute your auction from start to
finish. This includes:
Setting up and cleaning up the facility
Organizing and displaying your property: The auctioneer and their staff will
catalog your property, tag it with lot numbers and organize it for display. In some
cases, such as real estate auctions, they will allow buyers to look at the property a
week in advance. At the very least, buyers can view the property on the day of
Answering questions about your property, terms of the auction and the auction.
Registering bidders. This includes taking basic information from individuals
wanting to bid on your property: name, address, phone number and drivers
Collecting money from winning bidders
Money collected the day of the auction is usually deposited into an escrow
account, a third-party bank account that holds the proceeds until the auctioneer
can tally receipts and expenses.
Before you collect your share of the sale, the auctioneer's commission and
expenses must be deducted. Auctioneers are usually paid on commission, a
percentage of the gross proceeds from the sale. Some auctioneers are turning to
charging a buyer's premium to collect their fee. A buyer's premium is a
percentage added on to the final price of the item. You'll need to discuss how your
auctioneer will be compensated before you contract with them
Beyond the auctioneer's commission, your auctioneer will have other expenses
they've taken on your behalf. For example, if they've placed a classified ad in the
local newspaper for your auction, you can expect to pay for that ad. Or they may
have rentals, catering, set up and auctioneer staff. Those charges may also be
deducted from the gross proceeds from the sale. Or they may charge a buyer's
premium and use that to pay the expenses.
Avoid unpleasant surprises by asking the auctioneer about their commission,
what services they'll provide and what additional expenses might be involved in
the sale. Some auctioneers will provide a budget or a cost estimate for your sale.
|National Auction & Realty Co, LLC is a Georgia corporation and is
licensed with the Georgia Auctioneers commission.
Copyright 2005 National Auction & Realty Co, LLC. All Rights Resreved.