Questions About Auctions: What You Need To Know! Part Two

Part Two: The Nitty-Gritty

So you have decided to try your hand at an auction. We talked about the basics of an auction in part one. Mainly, you learned whether or not you should participate in an auction (as a seller) in terms of price for your property. Now we’ll dive a little deeper about the practice of the auction.

Let’s look at a specific example. Say you have a house, a big house, 6500 square feet. In the particular area where it is at (at a country club) there are about forty other houses on the market. Does this scare you? How are you supposed to compete with forty other homes for sale? You are asking yourself the wrong question. The question to ask is how many of them are on the auction block?

If your answer is none-bingo! There you go. People are crazy. I mean, they will come to this auction and they will get in this bidding frenzy, trust me-you don't ever know what is going to happen!

Now, if you have an auction and you can't get a bid above $475,000.00, it is time to walk away from this thing. I'm not kidding in this aspect. You do need to watch how the auction is going.

Think about it. If the market doesn’t want to pay more than that, you are chasing your tail.

Here’s another important fact you do not want to forget. The auctioneer adds the 10% buyer’s premium; it doesn’t even cost you anything. And make sure you get the amount that is coming to you. Make sure the auctioneer splits that with you.

I know it sounds crazy-you may not believe he is going to split that with you. But the auctioneer will do it for 5 points all day. All he does is add the other 5 points to your sales price. And you put up the money to do the advertising. The auctioneer has nothing to lose.

But, you need to have some input in your advertising. Most people might think 60 or 90 days out, but all you really need is 45. Forty-five is more than enough and you can even do it in 30.

Now the auctioneer will want 60. But don’t let that deter you. Ask yourself, how long does it take to run an ad and do some direct mail. In part three, we’ll talk about auctions and additional items you may or may not be able to include in your auction.