Home Selling Advice - Selling Your Home Via Auction
Selling Your Home Via Auction
One of the options for selling your home is via an auction. While this is not new for real estate sales, it is usually limited to homes that have been foreclosed on, (HUD homes that had a FHA insured mortgage) or really high end homes. I have rarely seen this used for normal resale real estate sales.
Selling via Auction involves a similar process to something like eBay, where you set a minimum price and people bid on your property until a predetermined date, with the highest bidder winning.
Once the auction is over the real estate transaction proceeds just like a normal sale, with contracts, home inspections and mortgage applications.
So what's the advantage of using this option, well to be honest I can’t really see one. From a Realtor point of view (assuming a Realtor is involved) the only positive is that is may save time and effort in a multi-offer situation. When a property receives multiple offers it’s a very time consuming process and using an auction mitigates this, with things handled by the auction site.
From a sellers point of view I can only see negatives to using auctions. For a start an auction brings an extra party to the sales process, and of course this party will want their cut. The fee can vary considerably, with fees typically in the 3% range. Typically this fee is paid by the buyer and is added to the final bid price. So while it does not impact the seller directly, how do you think a buyer will feel about paying an extra 3%, something they would not have expected in a normal real estate transaction. Why would they purchase a home which will cost them an additional 3%?
The biggest problem I have with this method of selling a home is that it takes away the Realtors duty to represent their buyers best interests. In a normal real estate transaction the seller and their Realtor sit down and discuss each offer received, with the highest offer not always been the best offer. Maybe the dates are better on the other offers, or maybe someone does not need financing, there are lots of reasons that could result in a lower offer being accepted. With the auction process this option is taken away from the seller, with the highest offer being accepted.Return to Home Selling Advice