Real estate can be complex. There are a lot of things to learn about: mortgages, buying, selling, repayments, etc. There’s a big learning curve. At Pengo Estate Sales, we offer property auctions in Kansas City, and a common question we get asked by people is why they should sell their property in an auction rather than through an agent? We’ve got you covered – here are the reasons why you should sell at an auction.
At a property auction, there is excitement everywhere. Hearing the pounding of a gavel and the shout of “sold” is like getting a shot of adrenaline into your veins. This could definitely be considered a benefit of its own, but the excitement of an auction will bring about other tangible benefits as well.
Excitement stokes the flames of competition, and this works out rather well in your favor. This is because of one simple truth: when more than one person wants your property, people will be willing to bid more than what they originally wanted to spend. The result can be enormous profits for you.
Think about it. Does your home have any unique features? Ok, now picture this scenario. Two potential buyers love your home’s roof, and their passion fuels them to continually outbid each other. I think you can see where this is going…
And finally, competition can work in your favor before the auction has even begun. If a potential buyer feels as though the competition will be too strong at the auction, they might just make you an offer for the property that’s hard to refuse.
A property auction is usually faster as well. Here are 3 big reasons why:
- Guaranteed sale date: One of the worst aspects of selling property is that the date of the sale is usually up in the air. If you’ve priced things right, it could sell in a day, but if not, it could take several months. This can be rather frustrating if you want to sell it quickly.
- No cooling-off period: a cooling-off period refers to how the buyer feels after making a purchasing decision. If the buyer cools off,they might want to back out of the sale. That can’t happen with property auctions. Outside of auctions, cooling periods can last for up to 10 days (depending on your state).
- Shorter pre-sale time: you will also save time before the sale occurs because you won’t have to organize property viewings for potential buyers who aren’t willing to buy. Auction attendees, on the other hand, usually have the intention of buying.
You Have Control
While an auction can seem like a chaotic jungle on the surface, underneath it all, you’re in control.
Some people mistakenly believe that the chaotic nature of an auction means that the seller has less control over the property price. However, this actually isn’t the case. Unconditional sales contracts, reserve prices, and vendor bids all give you plenty of control over the selling process.
Usually, you’ll want to utilize an “unconditional sale contract.” This means that the sale will be concluded on the day of the auction – there’s no need to wait until the buyer receives finances or inspects the property.
Selling is a Certainty
Auctioneers strive towards a 100% sold rate, and shortly after your property is offered from the podium, you’ll know if it gets sold.
Here’s an amazing statistic: 1/3 of sales arranged through estate agents fall through. Therefore selling through an auction is by far the more secure option.
And finally, a sale through a property auction is legal and binding – once the hammer falls, the unwritten contract is made with your buyer, and they’re legally committed to the purchase.
If you’ve ever tried to sell real estate, then you know how annoying it is to entertain “window shoppers” who aren’t really serious about buying. And even if you’re lucky enough to find a serious buyer, there are still several steps in the selling process, which means that that the agreement can fall through at any time. At auctions, though, this isn’t a possibility.
More Buyer Interest
When a property enters auction, it’s marketed relentlessly through email newsletters, catalogs, ads, for-sale boards, and through other various forms of media. And buyer interest can spike even higher if your property has unique qualities.
You can’t get more transparency for your sale than in an auction house. You will be 100% sure that you got the best possible price for your property. You may also include a reserve price – the absolute minimum price that the property will be sold for. That way, the property isn’t sold for any less than what you think is acceptable. Ideally, the competitive bidding will go higher than the reserve price, but if not, the property will not be sold for less than the reserve price.
Best Possible Price
Here are 3 of the main reasons why a property auction can get you the best price possible:
- A slow market is of less concern: a “buyer’s market” or “seller’s market” will have little effect on property auction outcomes. By the same token, this also means that you can get more value out of your property despite a slow market. Competition will arise between interested parties, bidding wars will ensue, and the final price of your property might end up much higher than it normally would.
- Effective marketing: this will bring your property to the attention of several different bidders. Because of the open forum nature of an auction, and the fierce competition that can arise, you can get the best possible price for your property.
- Auction fever: the fierce competition mentioned above is known as “auction fever.” When someone has auction fever, they can end up buying your property over its market value. Also, it’s hard for people to determine true market value when they aren’t aware of your sale price expectations. Therefore they are more likely to give in to their heated emotions and outbid the competition at (nearly) any cost.