ADVANTAGES OF REAL ESTATE AUCTIONS
Real estate auctions can be a very effective sales tool for all types of properties, including luxury residential and single-family homes as well as multifamily, retail and development sites. While the conventional sterotype of an auction is that of a way to move distressed property, this scenario no longer strictly holds true, as many “trophy home” owners are finding. For example, we are seeing an overall increase in auctions of luxury level residences. This uptick is especially apparent in second-home and resort home markets, where boaby boomers and empty-nesters are looking to sell their alternate homes. In general, real estate auctions offer an efficient approach to selling that provides several distinct advantages. Auctions do not replace brokers. Many national & international real estate auction firms work in tandem with local Realtors. Typically, the auction company offers a cooperating broker a fee, whether they are the listing or buying brokerage representative. Of major importance, the act of auctioning actually establishes the marketing value. An auction is a market-finding process. By bringing together a larger group of possible buyers to enter bids, the system establishes how strong the marketplace actually is. Auctions command wide ranging attention. They work in much the same way as tose for fine art & antiques. Auctions bring excitement to the marketplace and are proven to draw the attention of buyers from other sales occuring in the area. They also attract interest from a wider set of potential buyers well beyond the property’s immediate location. For example, the auction of a premier condominium residence at the New York Ritz Carlton generated mover 5,000 inquiries from all 50 states and close to 1,800 international inquiries! Privacy rights are also enhanced because so-called open houses are restricted to certain days and times and the actual sale is completed within a definitive timeframe. Knowing the precise date when the sale will be done can provide real convenience for the sellers. The auction process is open and more transparent to potential buyers. Buyers gather and see the act of bidding. Plus, many potential buyers are unsure of the property’s actual value. An auction sets a fair, current market value, with a price floor that offers a wider appeal to a much larger pool of potential buyers. In America, luxury home auctions reprsent a new form of marketing properties, while in Australia, for example, nearly 65% of all residential real estate is sold via auction.