Auctions have not traditionally been the way people have sold or bought real estate. The online marketplace is growing, and the advantages offered by an online auction are becoming more and more apparent. Let's look at the benefits for both buyers, and sellers of real estate.
Buyers
An auction is a competitive process, but so is a blind competing offer situation. At an auction, there is transparency. For example, a house is listed and depending on the price and market, a number of people may be interested and want to make an offer.
A buyer may get notice that there are in fact a number of offers on a property and the seller decides which offer they like best. Most often there is a time limit in which offers must be submitted, causing additional stress. In this situation there is no transparency in the bidding and you have to take the home as it has been presented, most times absent of home inspection and other inspections.
In general, we have found that buyers prefer the transparency of an open online auction to the intimidating blind multiple offer process, therefor creating greater participation in the purchase process.
In an auction, everything a buyer could want to know about the property is available up front. The bidding is open, so every party can see the bidding history. The price the highest bidder (or buyer) will pay is always just $1,000 more than the next highest bid. While auctions can get competitive, an online auction lasts for days, giving bidders lots of time to consider how much they are willing to bid. Compared to the normal way of making an offer on a home, or a live auction, this is a very low-pressure scenario.
Sellers
For people selling, an auction is a nearly certain way to sell a home. At Gordon's, we usually only see a house for auction not sell when the reserve price is too high. This can be scary for a homeowner. It's not easy to give up control of the transaction. However, real estate sold at auction will sell at the appropriate market value. That can be less than the assessed value of the home, but just as often it is more.
An auction gives a homeowner certainty that their property will be sold at a fair market price, and sellers can specify the closing date. The biggest barrier to the sale of a home (even in this economy) is unrealistic expectations about a home's value.
Meanwhile, home sales often fall through when buyers cannot get enough financing, or the home inspection allows the buyer to back out. At an auction, buyers have their financing available, and all the information about the home is available. It is a binding transaction.
The benefits are clear for both buyers and sellers. For a seller, giving up some control over the final price can give peace of mind and the certainty that their property will be sold in reasonable time.
For buyers, it is a fair way of competing with other interested parties. It is a transparent process from which everyone benefits.
For more information, contact Gordon's today!
