What If My House Doesn't Sell at Auction?

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Services for Real Estate Pros with Ron Taylor and Sons Real Estate and Auctioneers

There are basically two type of real estate auction. An "absolute" auction is where the property is sold to the highest qualified bidder with no limiting conditions or amount. The seller may not bid personally or through an agent.  Also known as an auction without reserve, this type of auction means the property will be sold to the highest bidder regardless of price.

A "reserve" auction is when the seller or his agent reserves the right to accept or decline any and all bids. A minimum acceptable price may or may not be disclosed and the seller reserves the right to accept or decline any bid within a specified time.

Ron Taylor and Sons Auctioneers discourages sales with a high reserve price and asks sellers to disclose any minimum or reserve price prior to a sale. In the case of bankruptcy and certain court ordered auctions, many properties are sold subject to a reserve price or final ratification by the Court before the sale can be completed.

If the auctioneer does a good job with marketing, the home will sell at auction. The problem comes in when the expectations of the seller is not fully explored by the auctioneer prior to the auction.  Many sellers do not understand that if you have 25 or 30 potential buyers bidding on their property, market value is reached when the bidders stop bidding.

If the seller at a reserve auction rejects the high bid, there may be a "no sale fee" the seller will have to pay to the auctioneer.  The auctioneer should have a good feel as to what the home will bring. If the reserve is higher than this figure, the auctioneer should take a bye on the property.

For more information on real estate auctions, go to www.canSellnow.com.

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Rainmaker
114,930
Susan Hilton
CENTURY 21 Beal, Inc. - College Station, TX
Texas Aggie Real Estate, College Station Bryan Texas Real Estate

Are you seeing a lot of properties sold at auction?

May 22, 2008 09:01 PM #1
Ambassador
1,434,480
Jennifer Fivelsdal
JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571 - Rhinebeck, NY
Mid Hudson Valley real estate connection

Ron: I am seeing more sign for properties to be auctioned and I am getting more questions about the process.  Which auction type is more common? 

May 22, 2008 09:08 PM #2
Rainmaker
204,699
Chris Tesch
RE/MAX Bryan-College Station - College Station, TX
College Station, Texas Real Estate

Interesting blog, Ron!  We don't have many auctions here, but I'm thinking that it might be a good fit for our 300K and up market.

 

May 22, 2008 09:15 PM #3
Rainer
11,921
Ron Taylor
Ron Taylor and Sons Real Estate and Auctioneers - Louisburg, NC

Susan, the NAR predicted that by 2010, 30% of all real estate will be sold by auction. The image that auctions are only for distressed or government seized properties is changing fast. Yes, we are seeing more homes sold via auctions. I believe you are working with lenders with REO properties. You may want to approach them to use the auction method of selling homes rather than the traditional "list and hold." You may need a professional auctioneer to help convincce them of the benefit. Do a Google search for Jim Ford, Texas auctioneer and call him. He would be glad to co-broker with you on some deals.

Jennifer, the best real estate auction is the absolute auction. It draws larger crowds and more excitement. The most common real estate auction is the auction with reserve because most of the homes out there have mortgages. I do know in one situation, the homeowner was willing to bring money to the table because they were highly motivated to get the home sold. They had moved and purchased another home in another state and had two mortgage payments. If the auction is an estate auction, the personal property can be sold "absolute."

Chris, an auction can be a good fit for any price range, even an old junker.

May 23, 2008 06:23 AM #4
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Ron Taylor

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