?Going ... going ... gone!?
The auctioneer?s gavel that once seemed to bang just for sales of old farms and foreclosed fixer-uppers is now coming down on city and suburban homes. Sellers are looking for ways to quickly unload properties and still get the highest value.
Though it?s not for everyone, auctioneers say, the advantages make it worth a look.
You?re in control
With auctions, properties are sold as-is. There are no contingencies attached to the bid.
?The seller sets the terms, not the buyer,? said David Cordier of Cordier Auctions and Appraisals in Harrisburg. ?There?s no negotiation about condition, or home inspections, or radon tests, or ?let?s get the roof inspected,? or anything like that after the sale.?
No staging necessary
Sellers must sign property disclosure forms, but they typically don?t make structural or cosmetic changes. Auction shoppers are responsible for arranging inspections before the sale, and they fully expect to make upgrades.
?If your kitchen is painted green, you can go ahead and change the color, but nine times out of 10, the new owner is going to change it to a color they like,? said Vickie Hardy of Haar?s Auctions and Hardy?s Auction Service in Dillsburg.
Setting the price
Sellers set the reserve ? the lowest bid they?ll accept ? based on market value, comparisons to similar properties and independent appraisals. Cordier said he usually recommends a reserve 10 percent to 15 percent below market value.
Even on auction day, the reserve can be lowered if bidding comes up short.
Sellers ?reserve the right to refuse any and all bids,? Hardy said. ?They make that decision once the bids are in.?
That enforced agility means that properties with higher equity are better suited for auction. If the property?s paid off or close to it, that?s ideal.
?I usually don?t like to deal with properties where the mortgage is close to the value,? said Jay Ziegler of Ziegler Auction Co. in Derry Twp. ?I like the seller to have a little bit of flexibility in the value of their properties.?
Fees and timelines
Auctioneers? fees can range from 1.5 percent to 4 percent of sale price. The lower the property?s value, the higher the fee.
Sellers pay for advertising, ranging from about $800 to $1,200. Auctioneers go for ?impact marketing? that spotlights the individual property and targets potential buyers, Ziegler said.
?We have four weeks to get the attention of buyers,? he said.
Quick turnaround
Timelines vary, but auctioneers say they can usually promote and auction a property within 30 to 45 days of signing their contracts. A settlement might follow in another 30 to 45 days. Quick turnaround means that owners aren?t paying insurance, tax and maintenance costs just to hold a property, Ziegler said.
Find your auctioneer
Get references and make sure the auctioneer has a current state license. Are they experienced in selling real estate? Do they have an active website and advertising plan? Are they active in the Pennsylvania or National Auctioneering Association? Will the auctioneer see the sale through to the end, smoothing out possible problems and going to settlement with you?
Don?t assume that your property is or isn?t right for auction, but get a free consultation and let the experts share their advice.
Unload the contents
Empty-nesters and executors love auctions because they can make a property?s contents vanish.
?In some cases, elderly folks will simply pack up what they want to take, give us the keys to the house and we get it ready for showing and have an auction of the contents and real estate,? Cordier said.
Hardy said that sellers can prepare the contents for auction or her firms will do it for an hourly fee. Auctioneers can also take contents to their auction houses, where regularly scheduled auctions attract crowds of knowledgeable buyers.
What if you gave an auction and nobody came?
Sometimes, a property doesn?t sell. Sellers must reimburse the auctioneer for advertising and might owe a fee. Even then, the auctioneers said, the property has gotten some exposure and, if the contents were auctioned, it?s empty and ready to be listed.
If the sale falls through after the auction, sellers keep the bidder?s deposit. Hardy said her firms sometimes ask the backup bidder if they?re still interested.
Buying a bargain
Thinking of buying a property at auction? Follow these tips:
- Prepare to show proof that you can pay the deposit ? cashier?s or certified check, or cash ? before bidding begins. ?That cuts out the tire kickers,? said David Cordier of Cordier Auctions and Appraisals in Harrisburg. At one time, deposits were based on a percentage of the sale price, but the uncertainty of that number and the poor economy have prompted many auctioneers to establish dollar-figure deposits, typically in the $7,000 to $15,000 range for most midstate properties.
- Get a mortgage pre-approval before auction and consider renovation costs in your financing and bidding.
- Know all terms and conditions, especially when signing the contract committing you to the purchase. If you back out, you lose your deposit.
- Get a home inspection before auction. Auctioneers are glad to help buyers do their due diligence, and as-is means as-is. No squawking about a cranky furnace or leaky roof after you?ve agreed to buy.
- Don?t expect the seller or auctioneer to reveal the reserve. They?re not about to blab the minimum they?ll accept. Do your homework to figure market value.
Learn more about property auctions
Source: http://www.pennlive.com/midstate/index.ssf/2012/09/selling_a_property_at_auction.html
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