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Real Estate Auctions - Why Real Estate Auctions are the Best Way to Sell a Property

BY: Adrian Loepp
Words: 493

It is hard to turn on the television nowadays and not hear a news articles describing how housing starts are down again or that foreclosures are at record numbers or new home sales are at 4 year lows. The housing sector has definitely taken its lumps over the past year. Now with the announcement last week that one of the largest sub prime lenders in the country is teetering on the verge of bankruptcy, there is a chill in the real estate markets and people are very concerned about the future value of their properties.

The typical method of selling a home via a real estate agent is just not working as effectively as it did in the past. Houses are staying on the market much longer and price decreases are almost the norm. Even with all of this price cutting, home sales are still way down from previous years. The old familiar way of doing things is no longer getting the results that people expect.

Real estate auctions on the other hand are enjoying a surge in popularity. It appears to be a match made in heaven. Real estate is the fastest growing segment of the auction business, and auctions are the fastest growing segment of the real estate business. Some of the reasons that real estate auctions are fast becoming a preferred method of selling a property quickly are:

Reason #1: It’s a Quick Sale
An auction affords property owners the opportunity to dispose of property now at today’s prices, rather than tomorrow’s prices. Time is money. Depending on reinvestment rates, $195,000 or even $190,000 today is likely more valuable than $200,000 next year.

Reason #2: High Carrying Costs are Avoided
All property incurs costs during its private negotiating marketing period — debt service, real estate taxes, insurance payments, maintenance and sometimes security. All too often, the carrying or holding costs of real estate during a private negotiated marketing program won’t be recovered in a higher selling price. In effect, the sooner a property sells, the greater the bottom line dollars in pocket for the seller and/or greater the savings that may be passed on to the buyer.

Reason #3: Property Market Value can be Demonstrated
Instead of relying on the appraiser to assigning an asking price, the auction process demonstrates the value of the property to sellers and potential buyers. Selling property by the private negotiated method, you may wonder whether you couldn’t have bargained higher. But if the property is sold at auction, the proof of market value is in the process itself. Moments before the final bid, another serious buyer bid just a few dollars less. The selling price is truly market driven.

The bottom line is, real estate auctions are a very effective way to sell a property quickly at market value. If you own some real estate and you would like to sell it quickly, real estate auctions might be your best bet in today’s uncertain markets.