The use of auctions as a viable marketing tool continues to grow rapidly in our real estate industry. Real estate professionals can identify auction-worthy properties, provide valuable insight to clients regarding the auction process and generate additional revenue through participating in real estate auctions.
There are really only two types of auctions — Reserve and Without Reserve. A Reserve Auction is one where there is a reserve price, and the property will not be sold unless that price is met. Sometimes that number is announced or published. The seller reserves the right to approve or deny the final bid. Generally in a Reserve Auction, once that number is attained, it is announced that the reserve has been met and the property will be sold to the highest bidder.
An auction Without Reserve is also often called an Absolute Auction. This is where the property is sold regardless of price. Absolute Auctions create a lot of anticipation knowing that the property sells regardless of price.
There are multiple ways for real estate to be sold at auction. Most auctions are what is commonly called a Live Auction. That is where the auction is vocally called by an auctioneer, and the bidders are in attendance onsite. Real estate has often been sold in an online-only format. Another form of auctions is the Simulcast Auction that utilizes the Live Auction plus online and telephone bidding — you may have seen this on television in the collector car market. Bidders are in attendance, but there are also internet and telephone bidders. Auctioneers may also choose to use the sealed bid process where offers are submitted without disclosure of the other bidders or amounts.
Another term you may see used in auction marketing is Subject to Prior Sale. In this scenario buyers can submit offers for the seller’s consideration prior to the scheduled auction. The seller may accept a pre-auction offer. This can be used to motivate buyers, and it is also suitable for homes currently listed for sale.
Tim Keller, H. K. Keller
Facts, opinions and information expressed in the Closing Comments Blog represent the work of the author and are believed to be accurate, but are not guaranteed. The Lancaster County Association of Realtors® is not liable for any potential errors, omissions or outdated information. If errors are noted within a post, please notify the Association. Posts represent the author’s opinion and are not necessarily the opinion of the Association.