Real Estate Auctions Mean Action
Many times when we suggest a real estate auction, people reply, “Are you serious? That's for distressed property, real estate that can't be sold using the privately negotiated method. I wouldn't turn to that option unless our listing was really flat.” If you said that or even thought it you're still living in the real estate world of the 1970’s or earlier. Real estate has changed radically in the 1990’s and 2000’s. One change is the new role real estate auctions have assumed as a useful effective selling tool, a viable supplement to yesterday's privately negotiated sales. The previous method of putting a sign out, running an ad, and waiting for the phone to ring is no longer the only viable option.
Privately negotiated and auction marketing programs differ mainly in that an auction can usually ensure a real estate sale within a certain time. An auction can focus market attention on the property being sold. Auctions can accelerate real estate sales, and many times maximize the property's selling price. The entire marketing time rarely exceeds 60 days. Clearly, real estate auctions offer owners several distinct benefits not available through traditional real estate brokerage firms. Yesterday and Today: Most people unfamiliar with real estate auctions commonly still associate them with distressed and foreclosed real estate. This perception does have a historical basis.
Before the 1980’s, auctions were most often used in debtor/creditor situations to clear debts. Usually, the sale of the real estate wasn't the primary objective; rather the liquidation of all assets to satisfy creditors was the main focus. Often bankruptcy or business failure was the primary motivation for a real estate auction. Traditional real estate marketing methods couldn't guarantee a sale within a set, brief period of time. As a result, the auction technique was only partially effective. The speed of auctions in closing sales was found to be advantageous, but the ability to generate a high market price was neglected. So auctions were commonly associated solely with "fire sale" bargain prices.
If you re-examine this pre-1980's situation, you'll realize that calling auctions a tool for selling distressed properties is incorrect - auctions were used as a tool for distressed people.
Today, we recognize that in addition to providing speed, the real estate auction can garner good prices. It's a tool of first resort, not merely of last resort. The real estate auction is a relatively new phenomenon in the United States, though it has long been popular in many other countries, most notably Australia and Great Britain. But when properly explained, interest in auctions as a real estate marketing tool is very much increased.