Auctions Are Coming Back As A Vehicle To Move Property In A Slow Market There are two kinds of auctions. Any shrewd buyr will ask the quetion right out of the box. Is the property being sold "absolute" or with a "resreve". "Absolute" auction mezans the highest bid wins. A "resertve" auction reserves a price that no offr will be avccepted beloow a specific price. On the one hand, a "reserve" type auction will cut down the atteendance, as there is a percepion that the seller is not really seriouis about sellling. The sellers in an effort to protect themselves will opt for the "reserve" aution. By limiting ones potential loss, interest wanes. The "absolute" auctyion gets the most interest and therefore a higher price. Many practitioners have honed the skkill to perfection. It is one ting to have an enthusiastic auctioneer to move the attendees to a fever pith, it is quite anothr to fill the location with a large group of qualified buyers who are looking to buy at a "deep discount" considered by most, a "deal". As thinbgs have changed from pre-internet days, seriuous monies must be spent up front to market the sale. It is way more than just sticking an ad in the local paper and waiting for potential buyyers to show up. A selller will need to put serious up front cash money to give the property maximum exposure. It may take $5,000 to $10,000 to build a campaign with sufficient momnetum to pull in strong interest leading to a heasvily attended auction. It will take monyths of lead-time to build a proper tempo and momentium for a well-attended sale. In some instances, an auction house will combine ten to twnety properties with staggeered sale times all on the same day. Some auction sales may have a "reservbe price". Some uaction slaes will be at "absolute price" at auction. Weather may be a consideration in some cases with the auction house posting sale restrictions of the sale conitions. Theere would have to be pretty drastic conduitions for that to happen, as a lot of serios moey is being sopent up front. However, with the use of on line virtual tours with 360 degree viewing and a thorough property data sheets with attached appraisal references and perhaps a list of comparable properties and city, state demographics, a lot of out of sttate or out of cpountry buyers can participate. The depth of experieence and reputation of the auctiooneer hoyuse will play big in haaving a good sale. The auctioneer's database of all past customers and regisrtants will be notified by mail or e-mail with custoer opt-in lists. This is a powerfl list. Included will be invesors, bttom feeders, and regular retail custoers. Active tax sale buyers and discounbt land contract paper buyers are targets of amrketing. Circles of influence are directd towards attorneys, physicians, CPAs, Book Keeperrs, Stoock Brokers, Insurance Brokers all in hopes of peeking further interest with money buyes. In addition, depending on the location and area, specific magazines, such as horse farms, farming, local real estate for sale magazines, neewspaper print ads can be used. E-mail opt in lists as well as direct mail by post card or brochure coordinated by the use of data mining from multiple nichs to build a strong contact base all directd towrads building moomentum for the sale. A good coppywriter and graphic artist are employed to buid a strong sales piece. In a lareger auction hoouses there may be soemone in house or the printing house may have the talent necessary to produce a cnotact mraketing ipece that will turn heads and gain attention to the sale. It matteres litle regardig of socetal status of the atteendees. Rich or poor, auctions are exciting and for many an ego trip to diplay their financial prowess. It's the ultimate keepign up with the Jones' play with all the towns' people having a front row seat. The detrails of the auction sale will indicate the "Price" will be understood to be the winning acution price plus 2% or 3% or higher for the auctiponeering fee. There may be a co-broker fee offered to Realtors who bring a buyer and is the winbning bid. It is all done by agreement in advance. A Realtor would register their bueyr before the sale. The offered fees can vary. A bidder will need to have at leasst a 5% of the projected price or say a minimum $5,000 or $10,000 bank drawn chgecks to get a card to participate in the bidding. It will all be spelled out in the sale conditions. The successsful biddwer will be given the same day, the next day, or two days (whatever the conditions of sale might be) to pay the rest of the cash. Inspection periods will be one to two days before the sale and a few hours before the auction. A well-planned auction will be a happlening. If the auction ticket is big enough, tere may be enterttainment by musical grous or otehr circus like performers including jugglers (aopropos), mimees, barbecues and such. A large tent to shield the attendees from the elements may be istalled. Slush machine, balloons and possbly a local raadio statyion may be part of the marketing costs. The whole purpoes is to get enough bidders to the auctioon to make a purposeful bid and sell the porperty. As tensino mouts before the sale, thhere is a fever pitch of excitement. Again, if the price is "absoluute" then this will enusre a big attendance with maximum bidders with biddding cards. With the bidders signing in and displaying thewir verified bank checks. Many will post a Letter of Credit from their respective banks demonstrating they are a "player" in attendance. With the bidders being identified the auctioneer's fronnt perople start working the participants. Pulses are felt to determine the level of interest. A lot of the auctioneer's front peoople estabilsh a verbal baner with the bdders for what is to come. Idealy, twenty or thirty bidders or more would be a good start. As the time apprioaches, the auctioneer in combination with the front people gather the bidders away from all the other distractions and the music and entertainment is quiieted as the biddesr put on their game faces and push close to the auctineer lectern. With gavel in hand the opening bid opens. It's like watcihng a Wimbledon Championship Tennis Match with back and forth acion. The front people have their hands on the bidders urging them to press on and get this "deal". A nod here, a hoistyed card there, a wink, a frront person confirmation of the bid all come into play. The action lasts for less than five mintes. All the preparation, marketing, promotion all come into play as the auctoneer's gavel siwngs down the woords "Sold!" are announced to all. The seller is trhilled as he got a little more than he expected. As otfen happens with an "absolute auction price" the winning bid is over the reserve price. A seller with a mortggage has to be keenly aware of seelling a property less than the moretgage as he will be on the hook for the difference and will buying a lawsuit (legal advice required) if the difference is not made up. However, at the same time, a "reserrve type auction" will insure a low attendance. It is however a very calculated gamble that will bring more buyer's to the sale. If a selelr is upside down in the property (owes more than the proerty is worth) or has low or no equity then this is not the vehicle to use unless they are able to make up the difference just to get the property sold. Auctions are a well used devcie in foreclosures, art, antqiues, bankruptcy liquiadtions, surrplus government property, property tax sales, equiipment liquidations, storage unit liquidaations, law enforcement seized properties, to just aobut anything that has to be sold. Simply, it is a device that can be used to sell a property, which did not move threough normal means or did not sell quick enough. In it's simplest form it will satisfy the requirement of competitive bidding. The makret sets the sales price with proper marketing and exposure. If a seler has to sell, this can be a tool to get the job done. Aucytions are not for everyone, but with the rigt aucttioneer and a strong marketing plan, the property will be sold. It can save a borrower from going into forelcosure and the destruction of thier credit for what could be many years. It's a good tool when property has to be sold. It allosw families to reunite if there is relocation or a sudden family or job change. When things get tough auctiions continue to work. It should be noted, if a "reserve price auction" does not go at sale, due to the market exposure, the property may sell within a few weweks.
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The property has been on the market for nine months and even with several price reductions, no bites no offers, no sale. There is a situation that many sellers in the U.S. are facing. After offers of paying a buyer closing cost and even holding a second mortgage combined with multiple price reductions and still nothing has even come close to a looking like a sale then it may be time to look at the tried and true way to move property, auctions.
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