Learn about the benefits of conducting a real estate auction


Real estate auctions are an interesting option for both owners and banks looking to sell a property quickly and with high profitability. While property auctions often apply to homes with mortgage debt, an auction can also be a good option for homeowners who have an unusual home they want to sell.

Fair market value

One of the biggest benefits of a real estate auction is the high probability of selling the property for its fair market value. This happens when buyers compete to reach a winning offer, bringing the price of a home to the highest price buyers are willing to pay and the lowest price a seller is willing to accept. This benefits both sellers and buyers, who can use the auction process as an indicator of home value.

Prior approval

Buyers wishing to bid on a property at a real estate auction must register with the real estate agency that oversees the auction. This allows the real estate entity to pre-approve buyers based on their creditworthiness. When it's time to bid, only pre-approved buyers can participate and know the seller's reserve price in advance. This ensures that a buyer can make the purchase safely.

Quick sale

Auctions are much faster than most conventional home sales. Sellers can schedule a date and know exactly when the home will sell. This can be useful for scheduling a move or making other plans that require financial commitments. The speed of a home auction also reduces the cost of selling a home by the realtor. Homeowners also save by reducing maintenance costs while the home is on the market.

Alternative

The real estate auction is an alternative for homeowners who have a home that would be difficult to sell or value on the open market. This is especially true for homes that include some type of special feature or unusual features that may attract a certain group of buyers.

How can you organize a real estate auction?

To successfully carry out a real estate auction, a day must be scheduled to hold the event. Before starting the auction, a minimum starting price for the property must be set. All interested parties should bid a minimum amount to be able to access the auction, it could be from 1% to 3% of the minimum established value.

Once the auction is open, potential buyers must proceed to deposit their offer in a sealed envelope. We must remember that there is a base price and logically the offer, to be really tentative, must be above said value. Once all the offers are received, all the envelopes are opened in the presence of potential buyers, making sure that the process is as transparent as possible. The person or entity that made the highest bid is the one to whom the property is awarded.

Once the auction is closed, a deposit contract is prepared where the buyer is granted a certain time to pay 10% of the amount. If this customer defaults on the payment, the purchase is automatically awarded to the second bidder.