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Slowing Housing Market Begs The Return of the Home Auction

With the housing market starting to slow up a bit in some areas of the country, sellers are these methods vary greatly by region, nationally there has been a rise in the amount of real estate auctions seen. Naturally, auctions are not a new phenomenon, but to see them increasingly used as a primary tool in selling real estate is.

The potential pitfalls are many in the auction business and while it is certainly one of the quickest ways to liquidate a home, it is often wrought with a great deal of uncertainty. What if your home doesn’t sell for the price you were looking for? What if the auction fees take out such a hunk of the selling price that you see little profit? These are key questions to not only ask yourself but to brace for if you pursue the auction as a selling method.

The uncertainty is compounded by the selling slow down that has precipitated these extra auctions. As fewer homes are sold in a particular area, it becomes harder to peg down a selling price for your home based on comparable listings. If there simply aren’t enough comparable listings to form a solid case, the true value of your home can be hard to determine. That can leave a fair amount of guessing to be done when it comes down to an auction and estimating a final sale price.

Those sellers that hold speed as a primary goal during their home sale will see the auctions as perhaps the greatest way to perhaps sacrifice some sale price but gain a great amount of speed. Real estate owners that have found their homes too expensive to maintain or who have to leave quickly due to job relocation or another life event might see the speed as a welcome benefit of the process. Auctions eliminate the steps of a selling process that some sellers see as tedious or slow.

Auctioned homes also avoid the sorts of hurdles that conventionally-sold homes may face such as financing contingencies. Auctions demand a cash payment, weeding out some of the effort typically used to separate the financially-sound contract offer from one that may not be as tenable.

Sellers need not worry about the sale status of a prospective buyer’s current home, for example, and can instead feel assured that whatever day they decide for a home auction will be the final sale date of that property. That can be a great comfort and puts the pace of the transaction squarely under the control of the seller.

Of course, the drawbacks scare most consumers away from the prospect of a real estate auction. Sometimes, prospective home buyers will equate the words auction and discount, giving them the impression that bidding should fall below the market price. If that is the case, bidders will simply stop bidding before the home reaches what they believe to be that market price, perhaps robbing the seller of a bit of the value of the home.

Additionally, fees on auctions can be steep and while consumers avoid real estate agent fees that would normally take place, they will typically pay a bigger fee to have the home auctioned off. The difference between those two percentage points could tell you a great deal about the validity of pursuing a home auction option.

If the real estate market in your area has slowed at any significant rate, auctions are perhaps something you’ll want to look in to, but only if you are prepared to sacrifice at least some of your home’s potential sale value for the benefit of a quick home sale on your schedule.


About the Author: Published by Joe and Colleen Lane, Realtors®. The Lane Real Estate Team services Tri City Wa Real Estate, Kennewick Wa Real Estate, Pasco Wa Real Estate, Richland Wa Real Estate, and surrounding Southeastern Washington Communities. Here is more information : http://www.joelane.com/




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