What is the value in listing your house for auction?
Fewer days on market and a higher rate of success
When it comes the question, “Why auction a home over a traditional sale?”, you can’t look past the facts. Currently in the past 12 months in the USA, Harcourts have seen just over a 90% success rate selling properties through auction. When you look at traditionally selling your home in Southern California you have under 50% chance of getting a result, which makes auction a logical option.
You can also look at the average days on market and compare auction and traditional sale. Obviously this can change from place to place, however if you look at the average days on market for a traditional sale in California over the past few years it has varied from 90-150+ days. Our auction platform has an average of just 33 days on the market which allows everyone involved to understand the true market value in a shorter timeframe.
This is paramount when selling real estate because we often hear from sellers that they don’t have to sell. Taking this approach when listing a property on the market is one of the main reason that sellers do not achieve what they want for their home; they sit and wait, then drop the price, which then becomes a game of chasing the market down.
Auctions allow you to negotiate up, rather than down
Another reason that auctions make a lot of sense is that it allows the agent that listed the property to negotiate up rather than negotiate down like a traditional sale. For example if you were to price a property in a traditional manner at $850,000 you have straight away told people what they are not going to pay. In most cases you would see someone submit an offer well below the asking price and it becomes a negotiation.
When a home is listed through the Harcourts auctions platform we list the property at a bidding-to-start-from price. This price is well below market value and below the seller expectation for the home, however the seller sets a non-disclosed reserve price which safe-guards them and allows us to find out how high the market will go. Think about it like a negotiation up rather than a negotiation down.
Selling through auction will help you to achieve true market value
Another query which we come across often is, “The last agent told me I could get a certain dollar figure”. We call it the promise of a price. When a home goes through our auction platform it is not the promise of a price, it is a process that finds the true market value of that home through feedback and offers that are not influenced by a listed price.
The process gives us a plan A, B and C in that we can sell a property before auction, on the day of auction and also if all else fails we can always revert back to the traditional sale so you have nothing to lose. In fact, you can gain the knowledge needed to price the home accurately to achieve a sale in any event.
A set timeframe drives buyers to make a decision
An easy way to think about the structure of the auction platform is to think of the timeframe between Thanksgiving and Christmas. We have a four week lead-up where people go crazy getting everything ready for one day, having that set date does not allow us to procrastinate, it drives us to make decisions. This is the same principal we employ to get a property sold in the shortest time for the true market value.
Aren’t auctions traditionally for properties which have foreclosed?
The banks still use auction as their primary way to sell foreclosed homes. This is because auction is the only proven way to get the highest price for a property in the shortest timeframe.
This perception can actually work to your advantage
We use the perception of the word ‘auction’ to drive over 45% more people through the front door of a home than we would see with a traditional sale. We get some many more people interested in a property that is going to auction – have you ever met a buyer who wants to pay too much? Getting the buyer to the front door is the hardest part of selling real estate.
It is a very common misconception in real estate that an agent sells your home, when in fact we could not sell a property to someone who did not want it.
It’s our jobs as agents to manage buyer and seller expectations
After thousands of transactions, we have identified that it is our job as listing agents to manage greed on behalf of the buyers and fear on behalf of the sellers. Greed on behalf of the buyers because I have never met a buyer that wants to pay too much and fear on behalf of the sellers because I have never met a seller that was not fearful of leaving money on the table.
Now, as contradicting as it may sound we need to feed the greed of buyers to get them to the front door, so the word auction feeds the greed but then the process manages that greed with our set timeframes and the competition of the other buyers. All the while providing the seller with the information and feedback they need to understand about the true market value of their home is. So in short, we use the stigma that surrounds the word auction to get the volume of people we need.
What kind of success have past clients had using the auction process?
We are very proud of all we have achieved with our auction platform, as over 60% of all our properties that have sold through our process have previously been listed on the market for an extended period of time. To have over a 90% success rate while listing properties where we needed to revitalize the reputation because other agents had promised a price and not a process.
One particular story really does put our platform into perspective. A broker from a real estate office outside Harcourts had his own property listed for almost two years and could not sell it. He had reduced the price several times and had still not been able to get the traffic needed but also lacked the leverage in any of his negotiations, as he could not get people to make a decision.
He saw one of our auctions and saw the property sell in a short timeframe for a great price in the local area where he worked and called us to talk further. We listed the home as an auction and had it sold in two weeks at a price which was higher than previously advertised.
The power of the set auction date drove a buyer to pay more so they could avoid being in competition on auction day.
If you’d like to consider selling your home through the auction process, and live in California, Nevada or Oregon, get in contact with Harcourts Brady & Co Auctions Manager, Ben Brady at firstname.lastname@example.org