Market Insights: Auctioning property works to seller’s benefit
Those that read the most recent Market Insights will know I am on vacation in Australia. Still here and I want to point out a huge difference in how real estate in conveyed. For at least the past 100 years the most common method of selling all forms of real estate in Melbourne, Australia, has been by auction. I have firsthand experience with this as I sold several properties via auction while living in Melbourne in the 80’s & 90’s. This visit has confirmed that actions are still the primary marketing tool here. And a superb tool at that. Since so much real estate is sold via auction this method does not carry the same stigma it does in Summit County. In Summit we see just a handful of real estate auctions in a year and just about every one of these are for bank owned or distressed properties.Imagine how beneficial the auction process is for sellers in Melbourne. The normal process involves a meticulously prepared marketing plan of about 12 weeks in duration that culminates in an auction, usually at the property on a Saturday. When the marketing is flawlessly executed the seller can be assured that all prospective buyers for the home know of the property and will likely be at the auction ready to buy. The downside is it could be possible that two extremely similar homes are for auction at the same time which, of course, divides the pool of buyers. Not good for the sellers.An auction takes the guessing out of property pricing and minimizes anxiety for seller. On the day of the auction the seller knows the property will sell, generally speaking, for the highest possible price the market will bear. If the seller wants more than this amount that harsh reality sets in quickly. This is much better than what happens most of the time in Summit. Here the sellers will often hope for too high a price then usually negotiates with one buyer at a time for a price below the asking price. Auctions create completion among genuine buyers which the standard process in Summit does not.In addition, the auction process provides that the seller has a defined timetable compared with wondering when a property might sell. Furthermore the seller of the property pays for all advertising leading up to the auction. This creates a commitment on behalf of the seller to very seriously consider accepting the highest bid. This photo shows a typical on site auction sign. As you might recall for the last Market Insights, real estate for sale signs are much larger here. This one is at least six feet high.Yes, auctions are an effective tool as long as the seller is fully committed and genuine in their desire to sell at the current market value and not a dime more.Talk with you next week…Daniel Webster Johnson is a broker associate at Resort Brokers Real Estate. He can be reached at (970) 393-3300 and/or daniel@YourMountainBroker.com *Data obtained from the Summit Association of Realtors
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