Should You Sell Your House by Auction?
Auctioning your home is vastly different from auctioning a valuable piece of art or antique jewelry. While you might wish to believe that your home will land a much higher profit at auction than it would if it were sold in the traditional manner, you would be mistaken.
What you may not realize about selling your home at auction is that the cons are more numerous and substantial than the pros. This article covers a few of those differences and the various pros and cons of each. Below we take a look at a few things to consider on selling your house by auction and perhaps why you shouldn’t. Read on.
Buyer’s Premium
When selling your home at auction, buyers must pay a buyer’s premium. This is approximately 10 percent of the purchase price of your home. Buyers are aware of this fee; it’ll be in the front of their minds when they bid on your home.
When a buyer knows that 10 percent of the final purchase price is tacked onto the cost of your home, they will lower their bid to include that fee. For example, rather than bidding $200,000 for your home, they’ll bid $180,000. They’ll pay $200,000, but the extra $20,000 goes to the auction house. The typical real estate agent’s fee is only 6 percent.
public home auction, today: for walletpop by cafemama, on FlickrThis work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.
Buyers in Numbers
When a real estate agent lists your home in the traditional way, the number of buyers with access to your home grows significantly. By contrast, auctions are not highly publicized, which means only a small number of buyers are privy to the sale.
Competition May Be Stiff, But Cheap
Buyers who purchase homes at auction are not typically in the market for a home in which to spend happy Christmas mornings with the kids. They’re looking to buy a home for less than it’s worth so they can turn around and sell it at a profit. In other words, they’re not willing to pay top dollar.
Making the Decision to Auction Your Home
Prior to making the decision to auction your home, you must take the time to educate yourself on the process. The more information you have, the better equipped you are to make the decision as to whether auctioning your home is really in your best interests. Real estate agents recommend you gather as much information as you can about the auction procedures.
Selling your home can often be a lengthy process. Between preparing your home for sale, finding the perfect real estate agent, and waiting on a buyer to come through with an acceptable offer, it can take some time. If you want to shorten the process by auctioning your home, beware of the pitfalls that come with selling quickly.
As you can see, there are some pros and cons going the auction route, which one is best for you will depend entirely on your specific situation. So simply weigh each one individually and proceed accordingly. Whatever you decide to do, good luck in selling your home properly.
