How Do Real Estate Auctioneers Work

by Qarah Ict Qarah ICT

The popularity of real estate auction sales by auctioneers is increasing daily despite the dominance of the traditional real estate selling process. Earlier, these auctions were labeled as dishonor sales done by the distressed sellers when there was no way to liquidate a property. But this view has changed as the number of real estates auctions are increasing daily because sellers of residential and commercial properties are opting to auction their property directly or turning to real estate brokerage houses to get a top price as per market rates from the auctions.

Auction opportunity arises when a seller's mind is auction-oriented, hoping the property will fetch a fair market price. His equity position in the auctioned property should be strong to get a fair price. With a strong equity position in the property, he will save the cost of paying a sales commission. The auctioneer should also avoid bearing high carrying costs associated with the property. The auctioning time should be perfect when the market is soaring high.

A profitable auction opportunity is created when there is a limited supply of a particular property type whose demand in the real estate market is relatively high or declining, with little buyer interest in this traditional sales process.

When a property is offered for auction, a sense of urgency arises to bring the interested parties together on a particular day. The sales process creates a price through competitive bidding among the participating parties.

A real estate auction is an exciting event for the auctioneer and the bidding parties; therefore, they are always well attended. Many real estate owners prefer a direct auction instead of going to an auction house to avoid paying a sales commission to real estate brokers, which is about 8-10 percent of the property's value. Also, the property owners have absolute control over the auction sales process. This is essential when real estate takes much time to sell, and a real estate agent or broker represents the owner. It is often wise for a real estate owner to auction a property not used to cut maintenance expenses.

The following factors should be kept in mind before the property owner auctions real estate:

He should consult experienced and professional auction consultants who specialize in real estate auctioning.
It should be ensured that the marketing campaign of the auction event is focused properly to have a high impact.
Importance should be given to direct mail marketing to targeted bidders/buyers.
The auction event should be advertised in print and audio-visual media to have a more significant impact. If possible, the consignment should be assigned to a reputed advertising agency to make the ad campaign more attractive.
The auction event should also be advertised through the internet and email.

Following are the advantages of real estate auctions for the seller:

The property owner can make a quick liquidation of their property.
The auction is successful in creating healthy competition among the bidders.
Their property is exposed to a wide range of prospects.
Closing is accelerated.
The sellers know the date and time when the property will be sold.
Auctions successfully reduce the time a property is on the market for sale.
The auction eliminates the number of out-of-the-blue events related to property sales.
Auction reduces the burden of the negotiation process from the seller's mind. He can sell the property according to the terms and conditions set by him.

The buyer also enjoys innumerable advantages from real estate auctions; they are:

He can set his purchase price.
He purchases the property at a fair market price.
He does not have to make long negotiations or bargains to finalize a deal.
Auction reduces the time to purchase a property.
He will not have to worry about emergencies because buying and closing dates are known to him beforehand.
Buyers are well aware that sellers are predetermined to sell.

At Columbus Elite Auctioneers, we focus on providing a range of services including real estate auctions, land auctions, downsizing assistance, and personal property auctions.