Once it was considered a way to sell only distressed properties. Today, couples use it as a way to sell their luxury home, especially if it is facing foreclosure. No longer is selling via an auction for properties that may not be worth much.
Bob and Karin Weber decided to sell their 11,000 sq. foot mountain oasis via an auction. The couple hoped the sale would streamline the process and they would see the return that they hoped for the 35-acre Elk Ridge Ranch. The couple has not had much success using the traditional short sale method. Properties that are listed at 1 million dollars make up roughly three percent of the real estate market, so the number of real estate companies offering auctions for luxury real estate is small.
Is selling a million-dollar home via auction the new trend?
Chicago-based brokerage firm, Sheldon Good & Company, selling the Webers' home, has noticed an increase in the number of people wanting to sell their home via an auction. The company went from arranging 32 such auctions in 2010 to arranging 62 last year. The company expects to have at least 70 auctions by the end of this year.
There have been more homeowners unloading their million-dollar homes. However, sales for $200,000 to $500,000 have shown the most increase, by 14.7 percent since last May. Million dollar house sales have only increased 8 percent in the same period. These auctions have helped auctioneers identify how much a house will sell in its market and who the buyers are. Some buyers do not want to meet a sellers’ minimum asking bid and auction companies must lower the asking bid to sell the property.
Auctions are a great option for sellers because they have more control
Sellers can advertise their property, “as is.” They also do not have to worry about paying the traditional fees to list and sell the property. Those fees are shifted to the buyer in the form of a buyer’s premium. The premium from the buyer covers the broker firm fees; closing costs and commission to the agent who helped sell the property.
Brokerage companies selling lux property, however, may not use a multiple listing service to sell the property. The company may opt to advertise the property internationally to find a buyer. The experience of selling at an auction, says Karin Weber, allowed the couple to do something different and feel like they had more control over the ranch’s sale.