The world’s finest art, classic cars, yachts, and memorabilia are sold at auction. The stock market is an auction that controls the value of stocks, livestock auctions have an impact on the cost of food products and energy prices are determined at the Chicago Mercantile, just another auction platform. The interest rate on money is even controlled by auctions. Over the past 20 years, eBay has brought auctions into every aspect of daily life and has sold billions of items by the auctions method.
Real estate auctions for non-distressed or mainstream properties have become extremely popular throughout the United States. Real Estate Auctions in foreign countries such as in Australia make up nearly 80% of all residential and commercial real estate sales. The dramatic increase in selling and buying real estate at auction is an indicator that real estate auctions are becoming the “new normal” in the United States. People have become more educated about the auction process in general and its advantages. Real Estate auctions are simply a faster more efficient way to sell real estate that puts the Seller in control of the sales process.
The growing popularity of real estate auctions makes sense when you consider they offer a transparent means to purchase real estate compared to opaque processes associated with the traditional sales approach used by real estate agents in which buyers are often outbid because they did not have the opportunity to increase their offer, thus, hurting both buyers and sellers. Consumers should consider auctions for the following key reasons.
- Fair market value: Buyers decide on the fair market value of the property. There is efficient price discovery during the open bidding process, and both buyers and sellers can understand how desirable the property is by seeing how many bidders are competing and how quickly offers are rising. As a result, Buyers can feel more confident about their offer knowing that they are paying exactly what the current market dictates, and home sellers can feel better about getting a fair market price.
- Less time spent on marketing a home: A traditional approach to selling a home takes weeks or months to complete while a live auction typically only shows potential buyers the house on one given day or, for online auctions, approximately a week. In an ideal scenario, at the end of that day or week, the property is sold. This limits the number of marketing efforts that Sellers must deal with, such as hosting numerous showings and open houses.
- Fast, convenient, and final sales: In an auction, the Seller determines the definitive date that the home will sell, which can be helpful for the seller in terms of planning their move or balancing other financial obligations. In turn, interested buyers can come to the auction with their pre-approved mortgage ready to buy the home. At an auction, sellers are in control via setting the minimum price they are willing to take, and buyers know immediately if they have the accepted bid on the property as soon as the auction closes. Given the quick sale, homeowners can also save by reducing (or eliminating) the time they have two mortgages if they already purchased a replacement home compared to the much longer time frame associated with a more traditional approach to selling a home.
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The real estate market is ever-changing. A Buyers’ market can become a Sellers’ market overnight. Real estate values are often determined by the season, the economy, and major events taking place locally, throughout the region and around the world. We’re here to guide you though the process and figure out which method is best for you.