Benefits of the Auction Method of Marketing for Seller
- The auction method of marketing exposes property to a large number of pre-qualified prospects and creates competition among buyers – at times exceeding the price of a negotiated sale. The auction process creates an atmosphere of excitement and competition
- Auction benefits a seller in both strong and slow markets. In a strong market, the competitive bidding process provides unlimited upside potential. In a slow market, auction allows the seller to sell property quickly at current market price and avoid the risk of overpricing and then offering price reduction after price reduction to stimulate buyer interest and catch up with slowing market conditions.
- Advertising and marketing via the internet, color brochures, auctionzip.com, email mail lists, on-site sign and newspaper and print advertising gives property targeted and complete market coverage.
- Accelerates sales – property typically is sold within six to eight weeks of listing and closes within 30-90 days from auction date.
- The Auction process treats all parties in the transaction in a fair and equitable manner. The terms and conditions of the auction are the same for everyone. When property is sold by auction, no potential buyer has an unfair advantage.
- Auction eliminates high seller carrying costs (such as mortgage payments, interest, taxes, water, sewer, heat, maintenance, etc.) by setting a specific date and time to close on the property.
- Auction typically requires the buyer to pay both percentage points of the 2% Pennsylvania real estate transfer tax (in brokered transactions the tax is typically split with 1% paid by buyer and 1% paid by seller) – this results in a 1% savings to sellers’ net position.
- The auction process requires action and a decision from buyers – they must act now or lose the opportunity to purchase.
- Auction agreements typically require a buyer deposit of 10% of the total purchase price. This money is given directly to the seller on the day of sale and is non-refundable. The 10% deposit calls a buyer to higher commitment than a typical negotiated sale and results in a successful close to sale ratio.
- Auction reduces the time that a property is on the open market and eliminates numerous, inconvenient, and unscheduled showings to unqualified prospects by concentrating all the showing activity into a few specific showing dates when all buyers are welcome to inspect the property.
- Auction allows the seller to be removed from the negotiating process and eliminates senseless contingencies. The seller knows exactly when the property will sell and when he/she will receive the proceeds from the sale
- Auction allows the seller to set the terms and conditions of the sale, maintain control of the property throughout the auction, and actively participate in the sale process
- The Brokers Participation Marketing Option allows the seller to utilize the large Real Estate network of Brokers/Realtors/ and Associates to the sellers advantage at auction
Auction Benefits for buyer
- Auction provides an opportunity to purchase property at fair market value based on selling price and not asking price.
- Auction eliminates negotiation periods that are sometimes long and frustrating and brings the transaction to the closing table
- Auction allows buyer to purchase property with the knowledge that there is a contending bid one increment below the purchase price
- Auction allows buyers to set their own purchase price by negotiating the price up while bidding
- Auction reduces the stress of setting dates and contingencies in that the terms and purchasing and closing dates are known in advance