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Real Estate auctions have been around a long time, but rarely have they occurred in our market ... until now. We participated in two different local real estate auctions last weekend. Are they a substitute for a traditional selling process? That depends on your specific ownership status and property situation.
One of our bank-owned listings was part of a 300-plus home auction based out of Las Vegas. Advertised opening bids were low - some in Southern Nevada as low as $500 and $1,000. Our listing opened at $89,000, list price is $229,415. The low opening bids generated interest, but the proverbial "fine print", the Terms and Conditions, revealed the "catch" - an undisclosed reserve. A reserve means that the Seller has a minimum price they will accept. After substantial advertising, three weekend open houses, and a lot of fanfare ... it didn't sell at Saturday's auction.
We attended another auction last Saturday that did result in a sale. The property was spectacular -10.7 acres, magnificent views, over 3,775 square foot home with a 3,775 sq.ft. basement, 2,400 sq.ft. shop with four roll up doors, etc. Well constructed and maintained, the property cost the Seller over $650,000 to build and was owned free and clear. After extended traditional marketing at well over $700,000 without a sale the Seller hired an auction firm from Missouri to hold an absolute auction. An absolute auction means the property will sell at the highest bid price with no minimum, reserve, or other "catch". The auctioneer worked with a local real estate agent in marketing, staging and conducting the auction.
The absolute auction attracted around ten bidders including our investor/friend that we were representing. The auctioneer did a great job of disclosure and informing the participants of how the process would work. At the advertised time, 10:07 a.m., the sale started. After bids stalled at $350,000 there was a three minute break so people could consult with their real estate agent, spouse, partner, etc. Bidding resumed and soon there were but two active bidders. The successful bid was $400,000, effectively $440,000 as the Buyer had to pay a 10% auction fee (5% in the auction for our listing - pay attention to fees!). The Seller sold his house.
Our Advice: If you are considering selling or buying a property at auction do your homework. As a Seller you need to decide what kind of auction you will hold, reserve or absolute, and what the ramifications of each will be. Ideally, auction frenzy will grip a bidder and they will pay too much ... isn't that why you are thinking auction? Your home hasn't sold at a realistic market value so you want to find the greater fool? Buyers at real estate auctions are quite savvy and are actually looking for something better than what they can get in the traditional marketplace. We were pleased to see the number of people with money to invest. Sure, they were typical Buyers in today's market looking to make a great buy ... but they were there with money in hand ready to spend it. That's refreshing.
Different than foreclosure or tax sales, themselves auction-based sales processes, these real estate auctions have a different feel to them. Your personal situation and property specifics will determine if such an auction will work for you. Consult with your real estate agent to see if it will help you meet your objectives. When it comes to choosing professionals to assist you with your real estate needs... Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781- 5472. firstname.lastname@example.org, www.carsonvalleyland.com