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Location: Stuck on the East Coast, hoping to head West
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Title says it all. I'm considering using an auction house to sell my house. This isn't to avoid realtors (actually, several of the auction houes I'm looking at use realtors); rather I want to have more control over the process. Of course, this would be a reserve auction.
House isn't about to be foreclosed on, I actually have a lot of equity in my house. I just don't have a lot of time and I certainly don't wait around for months (current time is about 3 months) for the house to sell.
It really appeals to me because I love the idea of having vetted buyers get together and compete on a certain date for my house. I would know when the exact date of sale and the closing date would be in days.
Just wondering if anyone has experience with this.
How do you know the current time is three months? If the auction buyers are not paying cash, you will still have to wait for financing to be approved. Also, how many buyers are in the "auction" pool versus the buyers with agents in the MLS pool?
Do auction buyers think they are bidding to have a home or a "deal" to buy.
Title says it all. I'm considering using an auction house to sell my house. This isn't to avoid realtors (actually, several of the auction houes I'm looking at use realtors); rather I want to have more control over the process. Of course, this would be a reserve auction.
House isn't about to be foreclosed on, I actually have a lot of equity in my house. I just don't have a lot of time and I certainly don't wait around for months (current time is about 3 months) for the house to sell.
It really appeals to me because I love the idea of having vetted buyers get together and compete on a certain date for my house. I would know when the exact date of sale and the closing date would be in days.
Just wondering if anyone has experience with this.
I've worked with a couple of national auction houses for high-end luxury properties.
1. The two well-known national companies I've worked with will not do a reserve, or if they do a reserve, it is very low, probably lower than you would like.
2. The seller is required to pay a fairly hefty fee up front to cover their admittedly extensive marketing costs. A recent auction we worked with required an almost 2% marketing fee paid up front (but is credited against the final renumeration.)
3. The buyer ends up paying a 7-10% buyers fee on TOP of what they have bid for a home. For example, a $2 mil. home buyer would end up paying an additional $200,000 to the auction company.
4. If there's a real estate agent involved, the agent still gets paid their listing fee.
Closing may not be "in days", depending on title work to be done, cash transfers, etc. Could be up to 45 days. And they may still back out, but they would have to pay a hefty penalty, most of which goes to the auction house, who then may need to re-wind on their marketing to auction it AGAIN.
Any GOOD auction house will need a minimum of 3-4 months to prepare for an auction -- to put their marketing in place, advertising, to let their client list know, etc, etc. So it's not like someone shows up at your house next week with a gavel. :-) We're currently prepping for one that we signed up for now that will take place in mid-May.
Location: Stuck on the East Coast, hoping to head West
4,640 posts, read 11,930,296 times
Reputation: 9885
Quote:
Originally Posted by dblackga
I've worked with a couple of national auction houses for high-end luxury properties.
1. The two well-known national companies I've worked with will not do a reserve, or if they do a reserve, it is very low, probably lower than you would like.
2. The seller is required to pay a fairly hefty fee up front to cover their admittedly extensive marketing costs. A recent auction we worked with required an almost 2% marketing fee paid up front (but is credited against the final renumeration.)
3. The buyer ends up paying a 7-10% buyers fee on TOP of what they have bid for a home. For example, a $2 mil. home buyer would end up paying an additional $200,000 to the auction company.
4. If there's a real estate agent involved, the agent still gets paid their listing fee.
Closing may not be "in days", depending on title work to be done, cash transfers, etc. Could be up to 45 days. And they may still back out, but they would have to pay a hefty penalty, most of which goes to the auction house, who then may need to re-wind on their marketing to auction it AGAIN.
Any GOOD auction house will need a minimum of 3-4 months to prepare for an auction -- to put their marketing in place, advertising, to let their client list know, etc, etc. So it's not like someone shows up at your house next week with a gavel. :-) We're currently prepping for one that we signed up for now that will take place in mid-May.
Just things to be aware of . . .
Thank you.
I'm in the beginning of my research and appreciate your comments.
I was looking at some very nice, higher quality town homes when the market fell apart in 2008/09.
The developer was a super decent person, but got caught in a bad market turn. I am trying to say that the situation and the homes were as good as could be . No "hidden" issues.
In order to get out frm underneath he turned to an auction house. They did a first class job of marketing the properties over a period of three months.
On the day of the auction, there were two buyers, and about a dozen "sharks" looking for rental property deals.
The two buyers bought their homes about 25% below the original listing prices. The "sharks" bid down another 25% and ther seller called a halt to the process.
My takeaway is that the "cost" of an immediate, known sale is about 25% below reasonable valuation. Sure, he got some liquidity, and you might too, but he (and possibly you) will pay a steep price for it.
If you proceed, put a reserve price in if possible, and wear your thickest skin on the day of the auction. You won't like the things people say, and you definitely won't like the way the bidding process unfolds. On a 300,000 house, the first bidder might show some interest at $50-75,000. Unless there are REAL buyers at your auction, the bidding will die in the mid 150's, regardless of how hard the auctioneer and his staff work the crowd.
It is not a pretty process, but if price doesn't matter, you will "get your house sold".
Title says it all. I'm considering using an auction house to sell my house. This isn't to avoid realtors (actually, several of the auction houes I'm looking at use realtors); rather I want to have more control over the process. Of course, this would be a reserve auction.
House isn't about to be foreclosed on, I actually have a lot of equity in my house. I just don't have a lot of time and I certainly don't wait around for months (current time is about 3 months) for the house to sell.
It really appeals to me because I love the idea of having vetted buyers get together and compete on a certain date for my house. I would know when the exact date of sale and the closing date would be in days.
Just wondering if anyone has experience with this.
We used an auction house (run by a realtor) to sell our last house. Like you it was not in foreclosure. There was also an undisclosed reserve. (Buyers didn't know what our reserve was in advance) After several unsuccessful months of trying to sell with an agent we were sick of the entire process which included a low ball offer, showings to buyers that absolutely could not afford it, last minute showings, the constant cleaning with two children, etc. We also had a new house that was near completion. This was immediately after 9/11 when there was a bit of a fall in the market and an even bigger fall in our local market due to a couple of large employers closing.
We appreciated that the house would only be shown a few times at scheduled open houses. There was no mortgage contingency and no inspection contingency. We chose the time and date of the closing. Buyers had to put down a significant sum the day of the auction, had to show proof of funds before bidding, and the buyers had to pay a 10% premium which went to the auction house. We paid several thousand dollars upfront for marketing (before people really used the internet for house hunting). The marketing costs were significantly less than a listing fee. The house was also listed in the MLS because the auction house was realtor owned.
If the house was not sold on auction day, we had the option to have the auction house negotiate with bidders. We also had the option to sell prior to auction day, if we received an acceptable offer--with the same terms.
We ended up selling for more than the low ball offer we received and did better than we would have if we paid agent fees. Most importantly to us, we moved when WE wanted to move.
I'd do this again if the market was large enough. Auction day was nerve racking though and a glass of wine helped
If you proceed, put a reserve price in if possible, and wear your thickest skin on the day of the auction. You won't like the things people say, and you definitely won't like the way the bidding process unfolds. On a 300,000 house, the first bidder might show some interest at $50-75,000. Unless there are REAL buyers at your auction, the bidding will die in the mid 150's, regardless of how hard the auctioneer and his staff work the crowd.
Yes, you're right, it's tough on the owners. In fact, the two companies that we work with flatly do not even allow the owners on-site during the auction. They have learned that the owners seldom add value to the process. :-) The week/10 days before the auction is spent by us giving tours to prospective bidders (luxury listings, so guided tours, docents, with a script). Owners not allowed. :-) Then, the day of the auction, the owner has to be OFF SITE, but reachable by phone.
It sounds like the above auctions are held at the house. Our auction was held in a very nice hotel conference room. Since we had an undisclosed reserve, and we had the right to remove the reserve during the auction, we had to be there. Since this was about 15 years ago, cell service was not as reliable, etc. We also needed to be onsite to sign documents.
Ted Bear--Our auctioneer started the bids at a dollar amount. Bidders didn't just start with some low amount. I forgot that there was a couple of other people in the auction room talking to bidders, etc.
Read a real estate book that recommended instead of dealing with bids as they came along, determine a date that all offers will be opened and the best offer accepted at that time.
According to them, that's your best chance with the buyers that are available at the current time.
I've never seen this actually happen. Is it even allowed?
Location: Stuck on the East Coast, hoping to head West
4,640 posts, read 11,930,296 times
Reputation: 9885
Quote:
Originally Posted by rrah
We used an auction house (run by a realtor) to sell our last house. Like you it was not in foreclosure. There was also an undisclosed reserve. (Buyers didn't know what our reserve was in advance) After several unsuccessful months of trying to sell with an agent we were sick of the entire process which included a low ball offer, showings to buyers that absolutely could not afford it, last minute showings, the constant cleaning with two children, etc. We also had a new house that was near completion. This was immediately after 9/11 when there was a bit of a fall in the market and an even bigger fall in our local market due to a couple of large employers closing.
We appreciated that the house would only be shown a few times at scheduled open houses. There was no mortgage contingency and no inspection contingency. We chose the time and date of the closing. Buyers had to put down a significant sum the day of the auction, had to show proof of funds before bidding, and the buyers had to pay a 10% premium which went to the auction house. We paid several thousand dollars upfront for marketing (before people really used the internet for house hunting). The marketing costs were significantly less than a listing fee. The house was also listed in the MLS because the auction house was realtor owned.
If the house was not sold on auction day, we had the option to have the auction house negotiate with bidders. We also had the option to sell prior to auction day, if we received an acceptable offer--with the same terms.
We ended up selling for more than the low ball offer we received and did better than we would have if we paid agent fees. Most importantly to us, we moved when WE wanted to move.
I'd do this again if the market was large enough. Auction day was nerve racking though and a glass of wine helped
Thank you and I'm glad it worked out for you. This is the scenario that we're looking at and very interested in.
I just watched my neighbor sell with an agent and it was a nightmare. Lots of unqualified buyers, contingencies, one buyer couldn't get financing, etc.
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