What is this new service from Real Estate One?
Real Estate One is proud to announce our new auction services. In many areas across the country auctions are a normal part of the real estate sales process. (No, I don't mean those areas where there are a lot of foreclosures.) For example, an estimated 50% of all real estate sold in Ohio is sold via auction. Because Northern Michigan has a large amount of buyers from outside of the area, it only make sense to utilize a method those buyers are familiar with.
Why use an auction to sell real estate?
There are several advantages to a seller using an auction. The first, is the cost to the seller. The seller pays no real estate commission. However, they still have the assistance of a realtor. The auction method is usually faster than a standard listing contract. Part of the reason is that the auction method compels all buyers to act by a certain day. If they don't, they risk missing out on buying the property. An auction is expedient. Buyers must be prequalified in order to bid. Properties are sold "where is", "how is". Generally properties close within 30 days of the auction without any contingencies. Lastly, sellers can be assured that they are receiving the fair market value for their homes on the day of the auction.
How does an auction differ from a regular real estate listing?
In the regular real estate sales process you list your property for sale with a real estate agent for a period of time (usually 6-12 months). During the listing period the realtor pays for all advertising and marketing of your property hoping to locate a qualified buyer. If they are unable to locate a buyer, the realtor is out the money they have expended to sell your property. Sellers help the process by making their property available for inspection by potential buyers at times that are convenient to the potential buyer. When an offer is received for the property it is generally conditional to financing and inspection by the buyer. If the buyer can't get financed or finds something in the inspection they can back out of buying the property or negotiate with the seller to reduce the purchase price. At the transfer of the property, the seller pays a real estate commission to the listing agent
What does an auction cost the seller?
The seller pays for the actual costs of marketing and advertising the property. AND, we're passing along our cost which are generally discounted from what the general public pays. Development Parcels may have a fee associated with determining splits and subdividing. That's it!
Every property has a marketing plan that is put together based on what the property is and how it will need to be marketed to attract the most buyers to the auction. The minimum cost is generally $2500. (Think signs, print advertising, television, mailings, etc). Those fees get paid upfront, not at closing like a real estate commission.
The auctioneer and any and all realtors are paid from a Buyers Premium. The seller still pays the standard costs associated with transfering the property to the new owner such as transfer taxes, prorated taxes, escrow fee, etc.
What is a "Buyers Premium"?
The buyers premium is a precentage amount added to the highest successful bid to determine the contract price.
Why would a buyer want to buy property through an auction?
First, the auction process allows the buyer to know detailed information up front about a property. Due Diligence is done prior to bidding on the property. This allows the buyers to save time and effort negotiating a contract on a property they later find out needs extensive repairs, and have to either abandon purchasing or start negotiations all over again. Buyers can feel comfortable that they are getting a fair market value.
What kinds of properties are suited for selling by auction?
Auctions are BEST for properties that have some unique qualities; Lake Frontage, Log Construction, Large Acreage, Development Parcels, Bed & Breakfast, unique architecture, vacant land, or a famous connection or feature.
However, most properties can be sold at auction.
How do I find out if my property is suited for an auction?
The first step is to set up a visit. We'll come out and review your property. We will also provide you with a detailed marketing estimate of what the costs would be.
Call (231) 645-1954. Thanks! Felicia Randall.
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