Selling Your Property in Auction – Know Why It Makes Sense
Auctions are a great venue to sell and
trade property and real estate. In this blog, we discuss some of the reasons
why auction marketplaces are a good idea if your goal is to sell a piece of property.
A professional auction can ensure that
your real estate property will sell at its real value—also called its “true
market pricing.” Time and again, it has been shown that auction environments
are the most efficient at achieving true market pricing. This is because all
buyers are treated equally—they all have the opportunity to participate.
In a property auction, potential
buyers all get to bid in a competitive environment. After each bid is
placed, other bidders are usually given at least 2 minutes to decide whether
they want to keep participating (or not). By the end of the auction, the
winning bid is determined—and it
accurately reflects the best price the market is
willing to bear. This price is the buyer’s genuine “best and final” offer.
You as the seller get to set the
reserve price, which is the minimum price for which you’re willing to dispose
of your property. This means that you protect yourself from having to sell at a
loss, or at a price you won’t like.
You can also be sure that only
qualified bidders participate come auction day. This is because bidders are
required to show proof of funds and complete their due diligence prior to the
event. This means that you get higher-quality bidders, and that increases the
chances of a successful deal.
Property auctions create a level
playing field. As transactions are open to everyone, you can ensure that there
are no back-door deals and no secret handshakes. The terms and conditions
for the sale of the property are disclosed upfront, making them available to each
and every auction participant.
Moreover, the likelihood of a transaction closing in an auction is nearly 100%. This is why it’s one of the most effective ways to sell commercial real estate. You can’t say the same about traditional transactions, which have a number of friction points that can cause a deal to fall apart even after a buyer has a contract in place. Because all deals are transparent in an auction—with all details disclosed from the beginning—these friction points are eliminated and the success rate is higher.
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