Do all homes qualify for an auction? The short and easy answer to that question is no. We get calls from homeowners who want to have their home sold at auction. There are many questions that I use to screen the homeowner but the three most important are: (1) What is your home worth? (2) How much do you owe on your home? (3) What is the least amount you are willing to take for your home?
Let’s start with question one, “What is your home worth?” The answer to this question is very important with regards to an auction. I normally will get a quick answer and then I ask, “How did you arrive at that figure?” The answer varies from, “I had my home appraised by a professional, a realtor told me it was worth such and such, a similar home in our neighborhood sold for so and so, or, my brother-in-law said not to take less than… .” ( I normally chuckle at myself when I hear this one.)
With regards to the realtor, I normally ask, “If the realtor feels it is worth that much, how come it hasn’t sold for that amount?” The answer varies but most of them center around marketing or I should say, the lack of marketing.
I then go on and explain that the home is really worth what a “ready, willing and able buyer” is willing to pay for the home. I continue to explain that when people stop bidding at an auction, the last bid has established market value regardless of the other sources that advised them otherwise. That market value figure could be greater or lesser than what they were told.
“How much do you owe on your home?” can end the conversation very quickly. Thousands upon thousands of homeowners across North Carolina and other parts of the country are “underwater,” meaning they owe more on their home than what it is really worth. If the homeowner owes more than what the home is worth, the home will not qualify for an auction. In fact I would say that if your LTV (loan to values) is 90% or greater, the home is not a good candidate for an auction.
And finally, “What is the least amount you are willing to take for your home?” The answer to this question can also make or break any auction consideration. The answer also determines if I have a motivated seller or a passive seller. While auctions are not necessarily the “last resort” to getting a property sold, I must admit many of our calls comes from homeowners who had previous listed their property with a realtor without success. Many had gone from a passive seller to now a motivated seller.
Will your home qualify for an auction? Give us a call and let’s talk.