Going Going GONE … Auctions are a Different Animal
“The four D’s aren’t the only reason to sell at auction,” said our class instructor this morning as he talked about the agency relationship for real estate and auction professionals. He said the FOUR D’s are: death, divorce, debt, and disaster. Auctions have long been labeled as stigmatized selling because of those four reasons, but they are becoming more and more common for sellers who just want to sell FAST.
Typically it takes about two months to complete the process - from when the auctioneer takes the “listing” to the day the sold property closes. There are two basic types of auctions, according to the class.
The Auction which is an auction with reserve. This seller agrees to sell but it should (although it doesn’t always) earn a minimal amount. The Absolute Auction is going to sell regardless of price to the highest bidder. Of course that doesn’t necessarily make it so, either. The auctioneer can choose to not sell a property if the price is just too low.
Another eye-opener at class this morning is there is NO cooling off period for a buyer at auction. If a buyer writes a deposit check for $10,000 - a nonrefundable deposit typially - and stops payment on the check, that buyer can go to prison for up to three years. Auctioneers sell as-is, where-is, period. Take it or leave it.
In a timely article in my local newspaper today, the popularity of auctions is growing,
“It’s kind of a gamble,” said Dale Hire, who has been buying and renovating homes for almost 20 years. For those with cash on hand and a good deal of chutzpah, there have been plenty of opportunities to buy. Nationally, residential real estate auctions last year ticked up 1 percent to $17.1 billion in gross sales revenue, despite slower real estate sales overall, according to the National Auctioneers Association.
Locally, even though sales of homes and lots fell 29 percent here in 2008 from the year before, auctions have shown surprising popularity. On Tuesday, more than 100 auctions were listed in the Nashville area alone.
Auctions are very exciting and can be a LOT of fun. As someone who’s attended home auctions, it can be very difficult to not jump in and make a bid when you’re swept up in the excitement. Luckily, cool heads have prevailed for me and I haven’t found myself to be the proud owner of a property that I can’t afford!
Photo by Urban Woodchuck via Flickr Creative Commons.
