One of the advantages of a properly designed real estate auction campaign is that the property can realize its fair market value on the auction block.
There seems to be a lot of confusion about how one arrives at Fair Market Value. In an effort to provide a concise explanation, here is the definition from West’s Encyclopedia of American Law:
Fair Market Value:
The amount for which real property or personal property would be sold in a voluntary transaction between a buyer and seller, neither of whom is under any obligation to buy or sell.
The customary test of fair market value in real estate transactions is the price that a buyer is willing, but is not under any duty, to pay for a particular property to an owner who is willing, but not obligated, to sell.
Various factors can have an effect on the fair market value of real estate, including the uses to which the property has been adapted and the demand for similar property.
Fair market value can also be referred to as fair cash value or fair value
“fair market value.” West’s Encyclopedia of American Law. The Gale Group, Inc,
1998. Answers.com 13 Sep. 2006. http://www.answers.com/topic/fair-market-value
While some would see an auction as an opportunity to pick up property ‘dirt cheap’, many auctions actually arrive at or close to the fair market value of the property. Unless the auction is an absolute auction, (LINK) the seller has set a predetermined reserve price known only to the seller and the auctioneer. By the definition above, if the auctioneer is able to generate a winning bid or hammer price (from the buyer) that the seller would accept where neither the buyer nor the seller is under any ‘duress,’ then Fair Market Value has been achieved.
Located in Indianapolis, Indiana, the Broker Auction Team is a dedicated group of professionals with a keen interest in the accelerated marketing process of Real Estate Auction. We believe that the use of a highly educated Auction Staff utilizing state-of-the-art marketing techniques is the wave of the future.
Although sale by auction has been widely used in this country for hundreds of years, today’s successful auction company is a quite different breed. Because today’s real estate investor is more savvy than ever, so too must be our entire team. This is not your father’s auction company. Gone are the days of a cowboy hat, an ad in the Sunday paper, and a big sign to bring in bidders. Today’s auction company brings experts to your closing table, experts in the realm of internet strategies, specific target marketing, financing consultation, creative property information packets, and 1031 Tax Exchanges. We have cultivated a group of advisors that include MBA’s, experienced business owners, and marketing professionals.