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How Does A Property Auction Work?

Monday, October 26th, 2015

There are many benefits to selling your real estate through property auctions. Property auctions are faster than traditional means of selling real estate. You will not have to worry about potential buyers traipsing through your home or business for months when auctioning real estate. You also don’t have to drag the selling process out when auctioning your real estate and can possibly get more money for your property. Real estate auctions are a simple, painless way to recover the money you invested in your real estate, but how do these events work? First, a seller must find a reputable auction house, then decide the type of property auction they would like to have and promote it. It is also important for sellers to understand the credits and payments associated with a property auction.

Find a reputable auction house for your property auction

Finding a reputable auction house is likely the most important step when it comes to auctioning your property. You’ll be guaranteed a smooth selling process, as well as the best price for your real estate, by choosing trusted auctioneers. The best auctioneer for a property auction is an established, reputable, and local auctioneer who knows what the real estate market is like in your area. You will likely also need a lawyer available to draw up contracts and legal documents pertaining to the real estate auction.

Decide on an auction type and promote your property auction

Once you have chosen an auctioneer, you will need to decide how you will be auctioning your property. There are typically two ways to hold property auctions, known as an absolute auction and an auction with a reserve price. An absolute auction means that the highest bidder wins the real estate. This type of event is the more exciting, dramatic way to sell your property, and you may end up getting more than you expected from the sale. However, there is no minimum bid, but if there are many potential buyers, this shouldn’t present a problem. Buyer’s are more attracted to an absolute auction than one with a reserve price.

A real estate auction with a reserve price means that a minimum bid must be met before the sale can continue. Figuring out a reserve price can be challenging, and you’ll need the auctioneer’s help. The reserve price should be realistic, but not too low, and should encourage bidders to be active in the event.

Once you have set everything up for the property auction, you will need to promote and market the event. The auction house will help you with advertisement, likely by advertising the event through brochures, their website, or emails. You can do your part by telling family and friends about the property auction and advertising through social media. You can also allow potential buyers to walk through and take a look at the real estate before the event to build anticipation.

Credit and payments associated with a property auction

Generally, the auctioneer takes care of making sure buyers are qualified to purchase property before they bid. Verification could require credit checks, letters of credit from the bank, or lender statements and documents. As for your fees as a seller, you’ll need to pay the auctioneer a percentage of the sale, also called a commission. The auctioneer’s commission varies depending on the auctioneer, but typically falls between six and ten percent.

Are you interested in learning more about selling or buying at real estate auctions? Contact the experts at High Plains Auctioneers for more information about upcoming auctions, or how to set up your own property auction. You can call us at (806) 244-6776 or Contact Us by email for more information about our services.