Value Bomb: Auction Style Real Estate Sales

 In Value Bombs

I want to give you the inside scoop on auction-style real estate sales. When a property gets listed as an auction sale it can be confusing because people automatically associate that with distress and that may not be the case at all.

So there are two different categories of auctions. The first is when the homeowner falls into default, their lender goes through the foreclosure process and the property may end up in a courthouse-style public auction, where buyers can come and bid all cash on the property. This is typically what people think of when they hear the term auction, but there is a completely separate category of non-distressed auction sales, and these are done for marketing purposes so usually these are when a property has been sitting on the market for a very long time, it’s not selling, the homeowner enlists an auction company to try and boost a sense of urgency around the property and get it sold more quickly.

I’m not a huge fan of this avenue because it assumes that the buyer who is willing to pay the highest price is going to go through all the extra hoops it takes to get registered for the auction, and that they are going to show up on a particular date or narrowed window of time. These types of auctions also have a tendency to attract lowball buyers, and at the end of the day the seller still holds the cards with what they will and will not accept in ultimate sale price.

So those are the two different types of auction sales!

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