We periodically receive calls from homeowners who are considering an auction as a method of selling their home. These potential auction sellers will basically fall into two categories: a passive seller or a motivated seller.
The passive seller has a predetermined dollar figure in mind they want from the sale of their home or property.
In a lot of cases, it is very unrealistic. They are very demanding of the auctioneer. They do not want to spend a lot of money in marketing the property for an auction, but they want a lot of people to show up at the auction. They have been told by friends, neighbors, or realtors, not to take less than such and such for the home. This kind of seller does not fit the auction criteria.
The motivated is very realistic and understands the current market. While not wanting to give away their home or property at auction, they understand the market value is determined by a group of potential buyers and not what friends, neighbors or others say it is worth. And they understand the hidden costs of holding onto the property for an extended period of time.
These hidden costs include the time value of money, additional mortgage payments if they were to use the list and hold method, additional pro-rata property taxes, continued maintenance expense on the home such as utilities, insurance and lawn care, etc.
The motivated seller is an excellent candidate for an absolute auction, that is, the home or property will be sold to the highest bidder regardless of price.
While the absolute auction creates more excitement and draws larger crowds, an auction with a reserve can be very effective if the reserve figure is realistic.
If what you owe on your home is higher than market value (what a ready, willing and able buyer is willing to pay, that is, what they see as value) then your home or property probably would not fit the auction criteria.
Are you a passive or motivated seller? If you are motivated, give us a call and let’s talk.