The Benefits and Risks of Real Estate Auctions

As many people have discovered, the traditional realtor firm isn’t the only way to sell a property. Real estate auctions are increasingly popular among people who buy and sell properties. As an alternative to the traditional marketplace, “[t]he benefits of selling via auction are particularly obvious during the bidder qualification period.” (Source: “Brokers See Benefit of Auction Process”, National Real Estate Investor) If you haven’t considered the auction route, you should keep the following benefits and risks associated with the auction process in mind. You may find that it suits your property-selling goals.

Benefits of Real Estate Auctions

One of the major reasons sellers seek the auction format is because it often allows them to dictate terms and conditions as well as a deadline. Selling for cash also allows sellers to move forward with their plans without delay once the sale is made. Since roughly 90% of auction sales close, there is every possibility that the deal transaction will close without a hitch–particularly with pre-approved buyers in attendance at the auction.

When it comes to complicated properties, many auction houses actually recommend the use of brokers. This provides sellers with the best of both worlds–the auction format coupled with the selling expertise of the realtors. Often sellers obtain great prices for properties they sell at auction–more than they expected. This is usually because buyers come prepared with a cap and may bid until they reach that cap.

Risks of Real Estate Auctions

While selling properties at auction often results in a great deal, it doesn’t always. There isn’t any guarantee that the price will be bid up by other interested parties. Also, sometimes bidders do not have the opportunity to have home inspections. Buying a home without an inspection is risky for the buyer, so the more inspection information you can present the better. Property sellers “have dozens of decisions and choices on both advisor sale terms and many auction formats.” (Source: “Commercial Real Estate Auctions in Soft Markets”, Heritage Global Partners) It’s important to weigh these considerations carefully. What is the minimum acceptable bid or can the property simply be let go to the highest bidder? These questions must be mulled over in advance.

Sellers who sell at auction have to rely on marketing. While a great auction firm often has regular clientele, some may not do all they can to market your auction. You may want to promote your upcoming sale online or at other venues in order to attract potential buyers to your sale.

Work with a Reputable Auction Firm

When you attend auctions hosted by reliable and respected auction houses, you’ll feel more comfortable about the process and may even find that some risks are mitigated. Many sellers find the auction route liberating. They can plan accordingly because they know what day they are selling their house. Working with a trusted auction firm with experience in real estate is essential for sellers who may be new to the action process.

These are a few of the pros and cons associated with selling a property at auction. Before you make your decision, talk to an auction house that can answer your specific questions and address all your needs.

Source:

“Brokers See Benefit of Auction Process”, National Real Estate Investor, http://nreionline.com/retail/brokers-see-benefit-auction-process

Luxury Real Estate Marketing Essentials – Stay Focused and Be Consistent

As branding and marketing consultants for top producing luxury real estate marketing professionals throughout the country we have identified two of the biggest challenges that agents face when trying to build a high volume practice. The first challenge is discovering one’s winning marketing strategies, the best formula for lead generation. The second is staying focused and consistently repeating the winning formula.

One of our clients was earning about $15, 000 a year in another industry. Now, six years later, she is making close to $1 million a year in her real estate practice as the highest grossing individual agent in her marketplace. What is her success secret?

She discovered her winning marketing strategy. She stays focused and consistent. For one thing, she only goes “fishing” for business where the fish are biting. That is, she determined the neighborhoods where the homes were selling fast and started farming just in those areas. This is a simple but often overlooked strategy.

What made her what we call a “breakaway brand” in her marketplace was her consistency of direct mail to homeowners and her consistency in advertising her listings through media channels that proved successful. She became a master of marketing listings in particular areas.

Do you track where each of your leads are coming from? Are leads coming from referrals, phone calls from signs, advertisements, direct mail campaigns, or the internet? When you test a new lead generation method do you analyze what your return is on your investment? Experimentation with marketing strategies is very important. But, without measuring the return on investment, you are missing a very important step on your way to mega productivity. Discover what is working. then, keep working it.

Once you have identified your winning marketing strategies you must have the discipline to repeat them over and over again. This is very difficult for creative people.

After, Neal Simon, the famous Broadway play writer, rehearses his cast and the show opens he attends the first several performances to experience, first hand, how the audience reacts to his story and jokes. He tinkers with the script until he is satisfied that it is his best work-the winning formula. Then the show is considered “frozen”. The cast, the stage crew and lighting crew must repeat this formula over and over again to deliver a consistent experience.

Great brands are built by providing a predictable, reliable user/consumer experience. This holds true in every price range of products and services. There is plenty to be learned and applied to a successful real estate practice by observing the best practices of name brand products and services that have endured over time.

This is part of a series of articles entitled, Luxury Real Estate Marketing Essentials. It is dedicated to luxury real estate marketing professionals worldwide.

Real Estate Auctions

Providing an innovative approach to the successful sale of houses in New Zealand, real estate auctions provide an effective and cost efficient method of selling property. Traditionally, selling properties through traditional sales channels can sometimes be an extended process, with the longer the timeframe of sale directly correlating with associated marketing costs and the dedication of time to the sales process. Furthermore, with the ongoing costs of maintaining a house which is on the marketplace, an extended sale period can quickly pile the expenses associated with the sale. Auctions provide owners with a quick sales channel to market where qualified and prospective purchasers are accessed who have the financial backing to purchase the property. As an auction can bring together a number of qualified purchasers to a property at one time, this can place pressure on prospective buyers to make present an offer on the property.

New Zealand real estate auctions have historically produced attractive sale prices for both buyers and sellers. The benefit of auctions is the achievement of market value for the property, where real estate sells for exactly what the market deems its worth. One of the safety features naturally instilled in auctions is that if the initial price is set too low, this is likely to stimulate an extended number of prospective purchasers to place bids and raise the price significantly. On the other hand, if the initial price is set too high, this will create a level of disinterest by those in the marketplace. This provides a natural safety net for both buyers and sellers of property in New Zealand being sold at auction.

The negotiation process, under traditional sales and marketing channels, can be time consuming and stressful. Furthermore, the notion of meeting estate agency staff and prospective buyers and dedicating time to showing these people through your house and home can waste time and resources. One of the main benefits of selling real estate through auctions in New Zealand is the elimination of constant public viewings. This is alleviated by providing the marketplace with full and disclosed information about the property, along with set viewing schedules prior to the auction, then enable qualified buyers to make informed buying decisions.

When considering the sale or purchase of your next or first property, contact a reputable estate agency in New Zealand who can inform you of the best course of action in respect to selling property through the auction process. Their experience and knowledge will enable you to avoid common pitfalls and get the results you desire.