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Why Sell at Auction?
Real Estate Auction Marketing Advantage Seller Benefits

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Why Sell at Auction

REASON NO. 1: It's a Quick Sale
An auction affords property owners the opportunity to liquidate the property now at today's prices, rather than tomorrow's prices. Time is money. Depending on reinvestment rates, $190,000 or even $200,000 today is likely more valuable than $250,000 next year. The time value of money is of major concern to any seller. The abbreviated marketing time and the potential for quick sale will substantially reduce the holding costs of the property, such as taxes, condominium fees, insurance and maintenance.

REASON NO. 2: High Carrying Costs Are Avoided
All property incurs costs during its private negotiating marketing period-debt service, real estate taxes, insurance payments, maintenance and sometimes security. All too often, the carrying or holding costs of real estate during a private negotiated marketing program won't be recovered in a higher selling price. In effect, the sooner a property sells, the greater the bottom-line dollars in pocket for the seller and/or greater the savings that may be passed on to the buyer.

REASON NO. 3: Property Market Value Can Be Demonstrated
Instead of relying on the appraiser to assigning an asking price, the auction process demonstrates the value of the property to the sellers and potential buyers. Selling property by the private negotiated method, you may wonder whether you couldn't have bargained higher. But if the property is sold at auction, the proof of market value is in the process itself. Moments before the final bid, another serious buyer bid just a few dollars less. The selling price is truly market-driven.

REASON NO. 4: Auctions Receive Maximum Marketplace Exposure
Auction companies employ saturation marketing techniques during the four to six weeks prior to the event itself. The marketing timeframe is more condensed than in traditional methods and, therefore less expensive. Additionally, these massive advertising campaign expenses are shared by all properties offered at the auction, resulting in much lower per seller cost.

REASON NO. 5: Auctions Freeze the Markets
Every current buyer in the marketplace will be very motivated to at least investigate the property being auctioned. The market is frozen. The opportunity to make what may be a good buy, as a practical matter, forces buyers to at least wait until the auction is held.

REASON NO. 6: An Urgency to Buy Is Created
An Auction on a specific date is definite (at least if you use what's known as an absolute auction format) other auction formats do make a non-sale possible. A sense of urgency is created: "buy this property today, it won't be here or available after tomorrow'.

In many private negotiated transactions, protracted negotiations end in frustration because of the buyer's unwillingness to close on a timely basis consistent with the seller's requirements. A buyer will often simply “sit on the fence" and refuse to commit to purchase a given property on a timely basis. Many sellers use the real estate auction program as a device to force a hesitant buyer to commit to a sale today. This has particular appeal in overbuilt or stagnant markets where urgency to buy does not otherwise exist.

REASON NO. 7: The Seller Can Be Confident That the Buyer is Qualified and Prepared to Buy
In an auction situation, the bidder must present a cashier’s check in order to be able to enter a bid. The buyer has been qualified for bank financing and is aware of the binding nature of their successful bid on the property.

REASON NO. 8: The Seller Knows That the Buyer is Informed of all details about the property, that they have inspected it, and reviewed all relative documentation. Last minute haggling and negotiations are avoided, enhancing the seller’s peace of mind.

REASON NO. 9: The Sense of Urgency at an auction is a definite advantage to the seller. The buyer knows that they must win the bid or their opportunity to purchase the desired property is lost.

REASON NO. 10: The Auction Process Sets the Market Value
While the auction process sets the market value of a given property on a given day, the momentum of the bidding often results in a higher price than the seller had set as their minimum or, then the estimated value at which the property would sell by traditional methods. It is not uncommon for a bidder to get carried away by the excitement of the bidding activity and to exceed their previously set maximum. Additionally, the seller has the benefit of a large number of qualified buyers all interested in their property and assembled in one location. The seller can be virtually assured that the property will sell its priced correctly.

REASON NO. 11: The Contract is Seller Oriented
The contract, which is written at the conclusion of the auction, is definitely seller oriented. Due diligence during the inspection period is required by the buyer, as the property is sold “as is” at auction. Further, the buyer has been pre-qualified for financing. No contingencies are allowed and closing is scheduled within 30 to 45 days.

REASON NO. 12: Advantages to Seller to Auction
Buyers come prepared to buy. “Lookers” are eliminated because most often bidders must qualify through a deposit of a certified or cashier’s check. There is a sense of immediacy at auction. Buyers feel that if all the properties are sold before the auction ends it represents their last chance to purchase a desired property. Sellers get maximum exposure for their properties. The auction marketing strategy differs from conventional advertising. It is more concentrated, therefore, more intense and visible. High carrying costs are avoided. Through auctions, the seller is in control and knows that if properly priced, their property will sell on a certain date, which is usually within 30-45 days from the auction listing. By selling quickly, the seller is able to avoid high carrying costs such as insurance, real estate taxes, security and maintenance and is also able to benefit from the use of the monies to reinvest in other real estate or investment opportunities elsewhere.

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Real Estate Auction Marketing Advantage Seller Benefits