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Bad publicity is something that growing industries cannot avoid. One of the things that is harmful is when a so-called real estate expert gives advice. Recently in a real estate journal the following question was asked and responded to by a real estate broker.
Question: Our home was appraised for $90,000. We want to sell and move to a smaller place that we will buy if we can get our home sold fast. We have noticed that more and more real estate is being sold at auction. What is the best way to sell?
Real Estate Brokers Published Response: Selling your home at public auctoin is not a good idea. Buyers at auctions are bargain hunters attracted because auctions are distress sales, and most properties are purchased for less than market value.
First of all this is NOT true. What happened here is that the seller went to a conventional real estate broker for an opinion. Of the hundreds of thousands of real estate agents and brokers in the United States and Canada, by far the majority of these people know little or nothing about real estate auction marketing and the above real estate brokers response is written proof of this.
The broker was quoted as saying that most buyers at auction are bargain hunters. The broker needs to be educated that the property could be the subject of a marketing effort that is on more of a professional level than conventional, private, one on one selling and one that has been proven to be a better way of selling real estate. Maybe we should ask the broker how many of their listings are actually sold, or better yet, sold in 30 days. To keep the broker honest check the figures reported by the multiple listing service (MLS). The MLS can provide information on the ratio of sales to listings. Brokers in some areas are happy to report that 3 out of 10 properties listed are actually sold. Many real estate/auctioneer firms report 8 out of 10 properties sold.
This business of saying most properties at auction are purchased for less than market value. To be blunt, this statement is nothing less than 'off the wall'. Let's explain - First of all, it's the buyers that determine value, not sellers. True market value is what somone is willing to pay. It's clear and simple, this is the only true market there is.
This so-called "normal" way of selling real estate is through Traditional, Conventional, Private Treaty (For Sale By Owner) or whatever you want to call it, is in my opinion is a terribly inefficient method of selling real estate. Think about this for a minute, these methods are based all on negative haggling.
1. Avoids listing price conflict. The is no false price.
2. Multiple Listing Service (MLS) is clogged up. Difficult to catch the purchasers' attention. Today's listing sells yesterday's listing. Price reductions are based on the duration of time the property sits on the MLS.
3. Auctions do not limit price. It is an increasing price as opposed to a decreasing price. Auctions freeze the market and eliminates the need for the seller to be the cheapest in order to sell.
4. There is a definate date of the sale. Marketing time is restricted to force buyers to act. Buyers do not know what sellers will sell for. Buyers also don't know what other buyers are or might be willing to pay.
5. Negotiations are in the sellers favor as pressure is focused on buyers. No counter offers are in the sellers favor as pressure is focused on buyers. No counter offers from seller. Any offer is returned unchanged and unaccepted. Buyer is still guessing.
6. Seller will receive unconditional cash purchase agreement with substantial non-refundable earnest money deposit. No more contingencies subject to financing, selling another property, etc. etc. Purchaser accepts the property on an as is basis.
7. Buyers at Real Estate Auctions go to "BUY" and they are disappointed when they are outbid. They are NOT there just to "look at" the property.
8. Time is money and Real Estate Auctions save time! A four week extensive marketing campaign with three one hour inspection periods. No interim private showings. These scheduled inspection periods are important as the buyers encounter other people interested in the property.
9. Concentrated marketing program focuses attention on the property being sold, not on the Real Estate Company or salesperson. Furthermore, it places ONE particular property in the limelight and not scrambeled within a system with hundreds of other listings.
10. You as the seller KNOW and approve of the organized marketing plan. You as the seller is not sitting around wondering if and when a potential buyer may come and view the property. No more unexpected, inconvenient requests to show the property with one clean up after another.
11. Real Estate Auction Marketing is on purpose marketing as opposed to "list and forget" MLS approach which relys on other realtors to show and try to sell.
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This site is dedicated to the auction method of marketing and appraisal services in the state of Michigan by auctioneer Ken Lindsay of American Eagle Auction & Appraisal Company.