When I say the words “real estate auction” what comes to mind?  If you are like most others, you will think of a distressed sale where there may be a deal to be had. It also creates a sense of urgency.  You may feel like you need to pick up the phone and get the details because it may just be the deal your clients have been looking for.  In other words, it generates a great deal of interest.

Smart companies like Private Auction Properties, who recently launched in San Diego are enabling home sellers and their agents to capitalize on all of the interest that naturally comes from auctions to get the best price in the fastest amount of time for their homes.

Now, online auction companies have been around for a while but it is not until now that a select few are starting to focus on homes with healthy financials.  It has mostly been used for bank owned homes and other distressed properties.  It is for that reason that it works so well.  The public smells blood in the water and you end up getting a flood of phone calls.

I know it works well because I have used auctions to sell my luxury home listings three times now, including one that I am currently selling in Fairbanks Ranch.

How It Works:

  • You post the property on the MLS as you always do but you set the price at what is clearly below market.  The fine print in the confidential remarks let’s agents know that this is a suggested opening bid and the final sales price is subject to the secret reserve or seller approval.
  • The property is posted to the online auction site where the auction date is set and the bids are collected.  Additional information, including all disclosures can be found up front on the auction site as well.  The idea is to have very few possible objections once you enter into contract.
  • The auction company advertises your property through their vast network, giving both the agent and the home tons of exposure.
  • The phone starts ringing as people sense what they think may be a killer deal.
  • The agent funnels all appointments into two slots during the week and holds the home open during those set hours.  The open house signs say “Auction” on them, which   This is to cause a sense of competition and urgency as home buyers are met with many others who are also interested in the home.
  • You will surely be met with many undesirable buyers who are only attracted to the low price and don’t want to step up to what it is really worth.  However, the beauty is that you will in inevitably also attract one or two real buyers that love the home and are prepared to purchase it at its real value.  You put up with the rest of the crowd and actually use them to your advantage to get the best possible price from the one or two real buyers.
  • The seller reserves the right to negotiate and accept an offer prior to the end of the auction.  This happens more often than not, as it did when I sold my client’s home in the luxury community of Meadows Del Mar.  The property was marketed at $2,200,000 and the first person that came through the home purchased it for $2,500,000.  They knew that the asking price was far lower than market value and they did not want to allow it to reach the end of the auction process and have to compete with everyone else.  Instead, they negotiated this deal and the auction was cancelled.

Online auctions can be a great way to differentiate yourself and secure a great listing.  It turns the sales process upside down.  Instead of having an asking price that you negotiate down from, you have a suggested opening bid that you negotiate up from.  Instead of every day on the market causing the property to become stale, every day on the market causes the anxiety to rise because you are coming closer to auction time. It’s an awesome process and also a pretty darn good lead generator.

Feel free to get in touch with me if want to know more.