Auction Benefits
Auctions benefit everybody: buyers, sellers and agents. Auctions attract greater numbers of potential buyers because the starting bid is usually low enough to entice people to bid. Everybody is attracted to the lure that they can buy at a lower price. In fact, the more bidders you have, the higher the price is bound to go.
This is why marketing is a very important part of an auction. You should spread the news about your sale, everywhere, to generate the highest possible visitor traffic to the property previews. In our experience, we have managed to attract over 100 visitors to each of two open houses that we have conducted for our clients. Of these visitors, 5%-10% translate into bidders. An extra benefit for the seller is that the auction eliminates numerous unscheduled showings. The buyers come to the property only on the preview dates. When you have two or more people competing for the property, you may more easily obtain the true market value of the property.
An auction defines stricter rules with regard to buyer qualification. For example, the earnest money deposit for an auction is higher than for a traditional sale. If the high bidder backs out, in most cases, this deposit is non-refundable. This means that the bidder should conduct a more elaborate due diligence before bidding on the property, such as securing mortgage approval from the bank, conducting property inspections, and so on. If you do this, you will more likely be able to sell the property by the end of the auction. Also, please note that by signing the contract, the buyer agrees to eliminate all the contingencies, (not in a Short Sale situation) so the seller does not have to worry about them. Auctions also eliminate high seller carrying costs, such as interest, tax, and maintenance.
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