If You Can Not Sell Your Home Try An Auction
Most home sellers resist auctioning their houses, considering it an act of desperation. Auctions can deliver a better bottom line than many people realize, however, and are often only a bit more costly than a good broker. The increasing number of mortgage companies auctioning off defaulted property is collecting an average of 90% to 100% of the appraised value of a home in some cases, as much as 105%. Moreover, depending on the form of the auction you choose, if you think the last bid you receive isn't high enough, you don't have to sell.
"In a slow market, buyers are extremely fearful of paying too much," says Cynthia Logan, who has managed auctions for Alliance Mortgage Co. in Jacksonville. "So when they're going through traditional channels, they tend to make offers that are way too low, or they just walk away."
The competition of an auction, according to Logan, usually pushes the bidding up toward the fair price. Moreover, auctions virtually assure a sale within six to eight weeks of the day you sign a contract agreeing to auction your home.
All auctions are not alike. For instance, you can put a so-called reserve price on your house, giving you the right not to sell if you get a lower final bid. Or you can allow absolute bidding, meaning that you must accept the best offer you get. An absolute auction tends to draw a bigger crowd, and you can still give yourself some downside protection by setting a minimum price at which bidding for the house must start.
To find an experienced and honest auctioneer, get a free list of reputable auction companies from the Certified Auctioneers Institute (8880 Ballentine, Overland Park, Kans. 66214). Then try to attend two or three auctions run by listed firms check the local real estate ads to find them. "You'll learn a lot," says Ann Wood of the Certified Auctioneers Institute, "by seeing the people an auction attracts and the prices the homes bring."
If you like what you see, ask the companies what commission they would charge for selling your house. Also, ask how they will advertise the auction and how much it will cost you. Marketing is always extra, so demand your money's worth. Will the auction company merely paper the local supermarkets with fliers, for instance, or send out glossy brochures to a carefully compiled mailing list? Then compare terms, decide which deal is most favorable, and review the sales contract with your lawyer. Expect to pay an average of 2% of the selling price for effective marketing and another 5% to 7% as commission somewhat less if your house is part of a large auction.
"In a slow market, buyers are extremely fearful of paying too much," says Cynthia Logan, who has managed auctions for Alliance Mortgage Co. in Jacksonville. "So when they're going through traditional channels, they tend to make offers that are way too low, or they just walk away."
The competition of an auction, according to Logan, usually pushes the bidding up toward the fair price. Moreover, auctions virtually assure a sale within six to eight weeks of the day you sign a contract agreeing to auction your home.
All auctions are not alike. For instance, you can put a so-called reserve price on your house, giving you the right not to sell if you get a lower final bid. Or you can allow absolute bidding, meaning that you must accept the best offer you get. An absolute auction tends to draw a bigger crowd, and you can still give yourself some downside protection by setting a minimum price at which bidding for the house must start.
To find an experienced and honest auctioneer, get a free list of reputable auction companies from the Certified Auctioneers Institute (8880 Ballentine, Overland Park, Kans. 66214). Then try to attend two or three auctions run by listed firms check the local real estate ads to find them. "You'll learn a lot," says Ann Wood of the Certified Auctioneers Institute, "by seeing the people an auction attracts and the prices the homes bring."
If you like what you see, ask the companies what commission they would charge for selling your house. Also, ask how they will advertise the auction and how much it will cost you. Marketing is always extra, so demand your money's worth. Will the auction company merely paper the local supermarkets with fliers, for instance, or send out glossy brochures to a carefully compiled mailing list? Then compare terms, decide which deal is most favorable, and review the sales contract with your lawyer. Expect to pay an average of 2% of the selling price for effective marketing and another 5% to 7% as commission somewhat less if your house is part of a large auction.
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