Auctioning off your home is not the most common method of sale, but it can be effective under the right circumstances. Home auctions are not just for foreclosures, short sales, or distressed properties. Even if your home isn’t in any of these categories, it might make good financial sense to sell at auction.
How does marketing for an auction compare to marketing a home for a private sale?
When selling a home, there are a few different routes you can take. You can go the for sale by owner (FSBO) route and market it privately, work with a real estate agent, or sell it to the highest bidder at auction. In the cases of working with a real estate agent or putting up a home for auction, marketing is handled by either the agent or the auction house.
How to Auction Your Own Home
When it comes to auctioning your own home, there are a few key steps you will need to take.
Is a home auction right for me?
The first step is to determine whether this is the right decision for your property. This will depend on a number of factors, including the condition and location of the home, as well as any unique features or benefits that it may offer.
Find an auction company or work with a broker.
Once you have decided to go this route, you will need to engage the services of an auction house or real estate broker who specializes in this field. These professionals can help with everything from marketing and promotion to conducting the actual sale itself.
What paperwork will I need?
You will also need to ensure that all legal requirements related to selling your home are met, including disclosures, home inspection reports, and any other necessary paperwork. Properties are sold as-is, so auction companies may not require everything.
What do I need to do before the bidding starts?
If you want to generate more traffic for your home auction, do not set a reserve price. Not setting a reserve, which is the minimum amount that you are willing to accept for your home, means that more bidders will be interested in your property.
Selling a home through a Traditional Realtor
When considering whether or not to sell your home using traditional real estate agents there are a few things you need to take into account before putting your home on the market.
First, you’ll need to decide if the time and hassle of selling the traditional way are worth it. Selling a home can be a long, drawn-out process, with open houses for potential buyers and less serious buyers alike, private showings for more interested buyers, home inspection, deciding between a refundable and non-refundable deposit, price adjustments, and it’s not always successful.
Next, real estate commissions can be high—much higher than an auctioneer fee. Finally, once you have a buyer and your home sells, the closing process can take 30-45 days.
Auctions are becoming more popular these days and have been proven to yield better results in a shorter amount of time than traditional realtors. So, if you’re thinking about selling your home, you might save time and make more money by auctioning it off.
How does buying a house at auction work?
When a buyer purchases a home in this way, they are purchasing the property as is—the winning bidder will not get to request any changes or repairs. Typically, there are no contingencies and purchases are typically non-refundable.
On the auction date, bidders show up and bid on the property. The person with the winning bid is the new owner of the estate and is able to close on it within a much shorter period of time after the sale.
Can I turn down a bid at auction if it’s not what I want?
If you are the seller, you can set a reserve price—the minimum amount you are willing to accept for your home. If the final bid is below your reserve, you do not have to sell the property.
However, if the bid meets or exceeds your reserve price, you are obligated to sell the property to the buyer.
How much does it cost to sell a house at auction?
There is typically a fee associated with selling a home at auction, which varies depending on the company or real estate broker that you work with. Typically, this fee covers marketing and promotion as well as conducting the actual sale itself. In addition to this fee, it is important to keep in mind that you will need to factor in closing costs. And while they are definitely lower, sellers still have an obligation for properties sold.
How long does an FSBO sale take compared to an auction?
Selling a home in this way typically takes much less time than a traditional FSBO sale. Auctioning it off typically takes just days or weeks to complete, while an FSBO sale can take months or even years before the property sells. This is because there are many more steps involved in selling a home traditionally, including marketing and promotion, open houses, private showings, price negotiations, home inspections, and the closing process.
What Bidders Need to Know
If you’re considering purchasing a property at auction, you should understand that buying a home in this way is significantly different than buying one through traditional means.
Property is typically sold as-is, with no contingencies and no price negotiations. In addition, buyers must move quickly to close on the property after winning a bid.
Payment Options: Plan Ahead
Before you get into a bidding war, ensure you have the funds to close and understand that many auctions only accept one form of payment. The buyer may need to pay in, with a cashier’s check, or with certified funds.
Finally, always make sure to fully research the property before submitting any bids. This means thoroughly inspecting the home yourself (sometimes this is not an option for real estate auctions) and understanding the true market value of the property.
Selling Your Home or Property Yourself
If you’re considering selling your home or property yourself, you should be aware of the pros and cons of doing so.
The most obvious advantage of selling your own home is that you’ll save on real estate commissions. In addition, sellers have complete control over the sale process, from setting the price to negotiating with the buyer.
However, there are some disadvantages to putting your own home on the market as well. It can be time-consuming as you deal with the title company and buyers yourself and you may be stuck with high carrying costs until you close.
Before Selling Your Home at Auction
It’s important to do your research and fully understand the auction process. Work with an experienced real estate professional to help guide you through this process and ensure that you’re making a sound decision.
Is auctioning a house a good idea?
Auctioning a house can be a good idea if you are looking to sell your property quickly. The process typically takes just days or weeks to complete, while FSBO can take months or even years before the property sells. This is because there are many more steps involved in selling a home on the market vs. selling at a real estate auction.
However, the seller has less control over the sale when auctioning a house. The house is typically put up with a reserve price, which is the minimum amount that the seller is willing to accept for the property.
Cons of selling a home at a real estate auction
If the reserve price is not met, then the property does not sell and the seller may still be responsible for paying any associated fees.
The process can also be very stressful for the seller as they wait to see if their home will sell and at what price.
Auctions are also not typically recommended for sellers who need to move somewhere quickly or have a lot of equity in their home as they may not receive their full asking price.
Will my house sell for less if I auction it than if I sell it myself?
One of the biggest concerns people have is that they might not be able to get as much for their home as they would if they sold it themselves. However, this isn’t necessarily true! In fact, depending on how well you prepare your house and market it, this could be a great option.
Participation in Auctions
Auction houses are reporting more interest from both buyers and sellers, and many have even switched from traditional real estate sales to an auction-only model.
Find Real Estate Auctions
Real estate auctions are a great way to get top market value for your home in a short period of time. If you’re thinking about auctioning off your house, you’ll need to find a reputable auction house in your area. You can search for one online or ask a real estate agent for recommendations.
Multiple Listing Service Data
MLS data is one of the most important factors in making an informed decision. This will help you understand what comparable property has sold for recently, as well as what similar properties are currently listed for.
How long does it take to sell a house via auction?
The amount of time required to sell a property at auction will depend on many factors, including the next available auction date and how frequently the auctioneer does this.
How do I auction my home?
You will need to search for reputable auction houses in your area. Once you have found one, you will need to provide them with the necessary documentation, such as your property deeds and tax records.
You will also need to sign a contract with the auctioneer that outlines their terms and conditions and your rights as a seller. Be sure to ask if you are able to set a reserve price or if it will be an absolute auction. (Absolute auctions sell homes for the highest bidding price even if it is below what you would have wanted.)
Is selling property online right for you?
For those looking to sell their home, an online auction may be the right solution. It’s fast, efficient, and you can reach a global audience of buyers.
The key to success is working with a reputable online auction platform that has a large user base and offers good customer support. In online auctions, potential buyers place online bids. Online bidding is a competitive bidding process, where bidders may engage much more quickly.
Online auctions, however, are not always the best when it comes to customer care and service.
Deciding between selling a house at auction and a private sale
Here are some key factors to help you make your decision:
Timeline. Auctions are typically a quicker way to sell a house than a private sale, so if you’re looking to sell quickly, this may be the right choice.
The condition of your house. If your house is in need of repairs or is otherwise not in top condition, it may be more difficult to sell at a private sale. An auction may be a better option because buyers expect a property to be sold “as is.”
Your desired sale price. If you’re looking to get top dollar for your house, a private sale is typically the way to go. With an auction, you may get less than your asking price if the house doesn’t attract enough interest or if the bidders don’t go as high as you’d hoped.
Your motivation for selling. If you’re motivated to sell quickly and are okay with potentially getting less money for your house, an auction may be the right choice.
What happens if I schedule an auction and someone wants to buy before time?
This will depend on the terms of your contract with the auctioneer. This may also differ with bank-owned properties, so it is best to check with the company you are working with before trying to get out of your contract.
There are a number of risks, but you could end up with a good deal of money
If you decide to go this route, be sure that you do the necessary research and preparation beforehand so that you can make a decision based on facts rather than emotions. Know your property’s market, ensure the auctioneer is part of the national association, and look into the current market.
I already listed my home as FSBO but can I still use an auction?
It is possible to sell your home at auction even if you have previously listed it as For Sale By Owner FSBO. Most auctioneers are happy to help you with this process, and many will offer a free evaluation of your property prior to you needing to sign anything.
Benefits of home auction sales
The benefits of selling your home at auction vs. selling it yourself include the ability to reach a global audience of buyers, a quick and efficient sales process, and, depending on market conditions, the opportunity to sell your home for top dollar.
If you’re considering selling your house at auction, be sure to weigh the pros and cons carefully so that you are making an informed decision, then reach out to a reputable auctioneer, like Looper Auction and Reality, to learn about the process for selling your property at auction.