By Ron Hyink
Has the realtor’s sign in your front yard become a part of your landscaping theme during the past umpteen months? Does the sign now serve primarily as a homing beacon when you come home late at night? Are you starting to wonder what the name on the sign will change to in the 22nd century? Welcome to the buyer’s market!
As you know by now, the term “buyer’s market” is a convenient term for saying that it’s a tough time to sell your house. Unfortunately as a seller, you don’t have much control over the housing market, but fortunately there is an alternative to playing the waiting game: real estate auctions.
Don’t think of the real estate auction as a desperation play; think of it instead as an offensive blitz. Typically you can get your house in front of a lot more ready buyers for a quick sale in an auction than through a realtor – but before you pick up that phone, there are several things to consider. Just as an offensive blitz may or may not turn out the way you plan, a real estate auction can be a boon or a bust.
“Most of our business is focused on estates, and the reason those people like to auction real estate is because so often the heirs and the siblings are in another state,” said Dennis Watson, CEO of Broker Auction Team in Indianapolis (www.BrokerAuctionTeam.com). “And as you know, it’s a nightmare just to mow the lawn, let alone be concerned about security and utilities and so on.”
But homeowners are also starting to get in on the game. The National Auctioneers Association reports that real estate auctions have increased in popularity by 4.5 percent in the third quarter compared with the same time last year. Keep in mind that this is during a residential sales slump. “If I put up an auction open house, it can be pretty amazing how many people go through that house,” said Watson, who has been an auctioneer for five years and a realtor for 30. He explained that auctions have a connotation of selling distressed property, and although auctions do attract people looking for deals, a lot of those same people will have an appreciation for a nice house. “And it doesn’t matter how nice a house you have, if you don’t get people through the front door, you’re not going to sell it.”
The downside to selling via auction, of course, is that the property may not sell, although the seller must still pay an advertising fee and a retainer fee to the auctioneer. If it does sell, there is the commission to pay. “A commission is charged only if we successfully sell and close, and that commission is generally much less than a traditional real estate commission fee,” said Watson. And not every house is a good candidate for an auction. “With all the houses for sale and with all the trouble with foreclosures and such, that’s really not conducive to auctions, because the people simply cannot afford to auction them. They have no equity.”
The upside is that, if the property sells, it sells quickly and the owner gets a check within 30 days. “And probably the most important thing is, in all of my real estate auctions, the property is sold as is,” said Watson, although a potential buyer will still have plenty of time to bring a contractor through to inspect the home. Also, Watson saidthat properties often sell outside the auction itself. “I probably sell as many before the auction and after the auction as I do at the auction.”
That’s what happened with Glenn Ferris, who recently served as trustee for an estate sale. Ferris got several appraisals from local real estate agents to provide a baseline for what the property was worth, and then he signed with the auctioneer. “The auctioneer started advertising, and many prospective buyers toured the home before auction day,” said Ferris. “As it turned out, the property was sold before auction day for almost 10 percent more than the highest appraisal from the real estate agents.”
When you play the auction game, you may be victorious or you may be disappointed, but you won’t have to wait long to find out which.
Results of the latest auction
Broker Auction Team held its latest real estate auction Dec. 5 at the Ramada Inn on Pendleton Pike near I-465. With 19 homes on the auction block, four were sold and offers were written on three others. “Now the listing agents will follow up on bidders who registered their properties, and we will probably sell a few more from the event,” said Dennis Watson, CEO of the auction team.
In this most recent auction, each seller paid a $750 advertising fee and, if the home sold, paid a 5 percent seller’s fee. “From that, we pay the realtors their full split,” said Watson. His next event will be held Feb. 15.
By permission of Current in Carmel