One way to sell a house that few homeowners consider is through an auction. It’s a creative way to sell a house and can help move a house quickly.
The house is marketed for typically two to four weeks prior to the auction date, advertising a reserve price of approximately 70% of the fair market value. During this marketing phase, the owner will hold several open houses to allow prospective buyers can see the inside of the house and even order inspections if they choose. The house is sold as-is to the highest bidder, assuming the reserve price has been met.
The goal is that with the advertised low reserve price the house will draw a lot of attention from buyers and create a competitive bidding situation. When this is the case, the house owner is able to sell the house quickly and may achieve a price close to the fair market value.
In a slow market, the owner runs the risk that no one, or only a few people bid on the house and bidding only reaches the reserve price. Also, the auctioneer normally charges the seller 5-10% as a marketing fee. In this case the seller could have sold the house for cash faster and without the hassle of open houses, inspections, etc.
How often do auctions actually work?
It’s a gamble. Auctions work if you’re lucky, and it does depend on the type of house and neighborhood. Auctions work well for unique or creative houses. If you’d like to explore this option further, give us a call!