Why Auction Real Estate? It’s about control…
Too often, especially in Texas, the mention of a real estate auction congers up the idea that seller’s “Are Losing the Ranch.” Nothing could be further from the truth. Whether you, as a seller, decide to auction or list your property you are electing to hire professionals to market your property and squeeze the most value out of your real estate the market will bear. The difference between auction marketing and listing is their method of price discovery. The question for a seller should not be why auction or why list, it should be, “What do I wish to control in the sales cycle?”.
If a seller wishes to control time and terms of sale while allowing the marketplace dictate fair market price then the auction route may be a viable marketing solution for the seller. However, if the seller wishes to control price while allowing the marketplace to decide the date and terms of the sale then listing a property with a reputable brokerage may be the best option.
- Property marketed separately
- Price negotiated up
- Up front marketing expenses
- Sold “As-is, Where-is”
- Pre-qualified bidders
- Pre-determined sale date
- Property listed in portfolio of other properties
- Price negotiated down
- Broker typically absorbs marketing fees
- Post sale contingencies
- Possible financing contingencies
- Sale date unknown
When using the auction method, there is a defined time to sell the property with a determined sale date. By specifying a sale date, a sense of urgency is created with potential buyers and this becomes a catalyst for the entire sales process. The auction method places multiple qualified buyers together in the same competitive marketplace, at an established time of sale. The seller is in control of time, thus controlling the financial impact of carrying costs.
The marketing strategy for the sale of real estate property at auction differs from the strategy of selling by listing. Using the auction method, the accelerated marketing campaign requires an up-front investment from the seller. This targeted and direct approach is designed to build value and awareness in the property. It should be considered an investment rather than an expense. This marketing campaign contributes greatly to the success of selling the property.
When using the auction method, the property is generally sold “As-Is, Where-Is.” The seller benefits from a contingency-free transaction. The sale of the property is not subject to financing or repairs because the Terms and Conditions of Sale are pre-set by the seller. The seller is always in control. With a traditional listing, post-contract contingencies need to be met before the sale is final, or the sale may be contingent on the buyer’s financing.
Are Auctions Successful?
Absolutely! As auctioneers, we often hear “Real Estate Auctions don’t work, I attended one many years ago and it didn’t sell.” While it is true not every property brought to auction will sell at auction it isn’t true that the auction method is ineffective. Chances are that a particular property was brought to auction by an auction company that was not experienced in marketing real estate or the property did not meet the reserve property set by the seller. While no marketing method can guarantee a certain outcome it is important to understand that not all listings sell either.
I do not want to “Give” my property away…
When you hear a new world record price has been established chances are it was set at an auction. The thing to understand about auction marketing is that the seller remains in control. Upon your initial consultation with your Alliance representative, they will discuss comparable sales of property like yours, in your area that has sold recently as well as properties that are currently on the market, it is those properties that are competing for your buyers. Your Alliance representative will give you a good, solid, factually based range of what you can expect to receive based on the activity within your market. The lower end of this range will be your reserve, meaning that any offers that do not meet or exceed the reserve are not valid offers and you are not compelled to sell your property. Currently, the Alliance team achieves over 120% of the reserve price for our clients.
Why Auction Non-Real Estate?
With today’s technology, you have more choices than ever when it comes to selling a family member’s estate, or your own business or personal assets. However, as licensed Texas Auctioneers the Alliance team continually attends educational classes and interacts with others in the auction industry from lawmakers to auction clerks. Our team must complete 80 hours of pre-licensure education, pass a state background check and exam as well as meet the minimum amount of continuing education each year. We know what can be sold, what cannot be sold and how certain items must be sold in order to remain a legal, binding transaction.
As with anything, sales tax must be collected and remitted to the State Comptroller no matter who or how the transaction is handled. Certain items have different rules and different rates when it comes to collecting sales tax.
No one person can know the value of every item that may come up for sale. That is why it is always best to have a professionally executed marketing plan that assembles qualified, interested buyers and allow them the ability to financially compete to own your property, assuring fair market value.
Our database of potential buyers will certainly outnumber any one person’s social media circle and our experience and professional education will assure our team will exceed your expectations.
Before attempting to conduct your own sale or hiring a “tag” or “estate sale” firm ask yourself these questions:
- Are the sales taxes for shop tools the same as for the bulldozer?
- Do I know how to legally sell the couch or recliner?
- Can I legally sell the propane grill and LP bottle?
- Can I sell my dad’s taxidermy animals?
- Do I know all that must be done to legally sell a vehicle?
- What could possibly be in mom’s jewelry collection that would get me in trouble?
If you do not know or are Googling the answers to any of these questions, you should call Alliance. If the firm you are considering does not know the answers nor do they carry at least $1,000,000 in Commercial General Liability insurance then you should call the Alliance team at 254-965-4040.