Selling properties that range from residential and luxury homes to commercial buildings and development lots, the auction method of sale continues to rise in popularity. With an accelerated marketing plan and the possibility of making an immediate sale, many property sellers are finding auctions to be their ticket to financial liquidity.
For those considering the journey down the auction route, here’s some invaluable advice from the best in the business:
Lamar Fisher, President & CEO, Fisher Auction Company:
“If the seller is selecting an auction firm to handle their property(s) via the auction process, they also need to do their due diligence as well and thoroughly check out the track record of the firm, specifically previous client references. One key factor for Fisher’s clients - we really service the client and keep them abreast at all times of the process so there are no surprises on auction day. Whether there might be 2 buyers or 200, you need to let your seller know what the market is telling you price-wise, and create realistic expectations.”
David E. Gilmore, Managing Director & COO, Sperry Van Ness, Gilmore Auction & Realty Company:
“Try to think like a buyer when selling. Be realistic in pricing. Know everything about your neighborhood.Thoroughly check out your chosen auction company. Do they have the resources, mail list, email list, local market knowledge and experience with your property type? These are all things you need to consider when thinking of auctioning your property.”
Mike Carey, V.P., Portland Branch, Tranzon Auction Properties:
“When I talk to people, it’s important they understand that to some degree, I’m their partner. I have to know going in that I can be successful for them, or at least have a fighting chance at being successful. At the end of the day auctions are about time. In the real estate world, we turn an ill-liquid asset liquid faster than any other sales methodology. We bring the market to the seller as opposed to waiting for the market to come to us. In circumstances where an auction isn’t appropriate for a seller, I tell people several things - If they have the luxury of time and can wait for the market to turn around or wait until the right person comes along for their property, then they should wait. Time kind of cures all wounds.
The other thing I tell people that may not have the luxury of waiting but don’t necessarily want to go the auction route, is that they should think about leveraging their traditional broker a little bit more. In most auctions, the auctioneer charges a direct fee for marketing, and we do more marketing in a shorter amount of time than most brokers do. Lots of times, I tell people that if you’re considering going to auction, they should consider calling their broker and say ‘I was going to go to auction and my marketing campaign was going to cost five thousand dollars. How about you and I figure out how to spend that money effectively so that I get more exposure through you, and we can do a more traditional negotiated sale? Bottom line, I need to drive some buyers to my property’. Pay for some of that on your own. I don’t think people pursue that opportunity very often.”
John Dixon, Founder & CEO, John Dixon & Associates:
“Don't offer a property for sale at auction unless you're ready to sell it. Make sure that if you will sell it with other people's money on the property, then you're probably not a candidate to sell it off - if you don't clear that debt, then the bank is probably not going to release it. Remember that an auction is a way to minimize your loss. It is to make that property sell and sell it as-is, where it is. You get money in 30 days and it's over. So I would say for the seller, the primary thing is to make sure that you’re ready to sell that property before you put it on the auction block.”
Barry Baker, Founder & Owner, Ohio Real Estate Auctions:
“Make sure you have the big two - motivation and equity. Be willing to sell the property absolute in order to get the most people and thus the most money. Be reasonable and understand the market. Become familiar with the phrase “It is what it is”.
Dan Mahaney, AARE, Specializing in Luxury Real Estate Auctions:
“Be realistic and understand the buyers’ motivations. Sellers have got to be willing to listen to the market. You need to put your purchase cost of that property aside and be willing to listen to what the buyers are telling you. But that’s hard in certain price brackets. A guy that has a three, five, or seven million dollar house didn’t get the house by being foolish. These owners are very educated businessmen who know the drill, and that can make them less willing to listen... You’ve got to be willing to listen to what the buyers and the market are saying.”
Bret Richards, Auctioneer & Sales Manager, Hudson & Marshall:
“First, know the current market in that area on that asset. No two markets are the same. Even if you’re dealing with foreclosures, you have to know what the surrounding market is doing. Second, trust your real estate agent. If you don’t think your agent is spot-on with their numbers, get another one. There are a lot of good professional agents out there.
Third, understand that time is money - hold costs and carrying costs add up, so know that price competitively up front or use auctions up front to reduce all those costs. That’s the goal - to get the property back in the community’s hands.”
Max Spann, Jr., President, Max Spann Real Estate & Auction Company:
“Do your homework on the auction process, and understand the different formats and what’s best for you as a seller to help you maximize value. When done correctly, auctions are really a market-maker. They restore confidence to the marketplace because it’s a communally bid event, so it validates buyers’ decisions. And it’s a very efficient, clean way of transacting real estate. Auction marketing works unlike any other thing, especially in the market that we find ourselves in right now.”
Richard Warner, President, Warner Real Estate & Auction Company:
“Have in your mind, ‘it's time to sell the property and move on’. Consider the carrying costs of keeping the property in your decision to sell at auction. Ask for a written proposal and line item budget from the auction firm(s) you are interviewing and review it thoroughly. Also, request testimonials/reference letters and sample marketing pieces from the firm(s) you are interviewing as well.”
Melissa Mitas is a contributor author at propertyauction.com . Contact her at 888 265-2694.