For the buyer, this can mean a smart investment, since properties are usually purchased at fair market value through competitive bidding. Because the auction sale is conducted in an open forum, both motivated buyers and motivated sellers have the assurance of watching the property's true market value emerge as the bidding process progresses. For both buyer and seller, fair market values for the property prevail. An auction creates competition among buyers and exposes the property to a large number of pre-qualified prospects. Because it is an accelerated sale, property can often be sold within 6 weeks of listing.
Factors of a Successful Real Estate Auction
- The desirability of the property being sold. This includes location, condition and surrounding properties.
- An aggressive marketing and advertising plan geared to prospective purchasers.
- Realistic expectations on the part of the seller.
- Selecting the type of auction that best suits the property and the seller's needs.
- Conducting the auction in a professional manner and follow up through closing.
- Undertaking due diligence ahead of time so buyers are knowledgeable and the only issue that remains is price.
Most properties, but certainly not all, are saleable by auction. Residential property (including town homes, condominiums, cooperative apartments and single family homes), commercial property, vacant land, even boat slips are sold at auction.
Types of Property Suitable for Auction
Some sellers try to sell unsuitable or unmarketable property by auction. This is property that has been on the market too long, causing prospective buyers to consider it "tainted". These types of properties don't do well at an auction and most reputable auction companies would not accept them.