When I visit with a client to discuss selling a piece of real estate at auction, a seller will sometimes say, “I think I should list my property in the MLS with a realtor, and if it doesn’t sell that way, then I’ll consider an auction.” I advise exactly the opposite for several reasons!
First of all, once a house is listed in the MLS, it establishes the top price for the property. With this type of traditional listing, you ask what you hope to get for your property. However, everyone knows that prospective buyers are going to make an offer somewhere below that price, trying to get the best deal they can. If you have a really popular property, or if it’s a really strong seller’s market, perhaps you’ll be able to “stay the course” and get your full asking price. It’s pretty certain, however, that no one is going to come with their first offer HIGHER than your asking price!
Also, some sellers want to list their home or property for a lot more than the market will bear – just in case someone is crazy enough to pay that price! But an overpriced property typically won’t sell, and the seller ends up decreasing the price a little bit every month as they receive no showings or offers. The problem with this concept is that once a few months have gone by, the property can be perceived as “tainted.” Prospective buyers will typically say, “There must be something wrong with that property because it’s been on the market for 95 days and nobody has bought it.” In actuality the property is fine – it was just overpriced and the seller had unrealistic expectations.
So I suggest, you first list your house or property for sale at auction with a “reserve” price that ensures you won’t have to sell unless you get at least your minimum acceptable price. The house is brand new on the market with no taint from having already been listed. No cap has been set on the purchase price as typically happens when it is listed in the MLS. Indeed, the excitement of an auction, and the sense of competition will often drive the price above the seller’s expectations.
And if your property is popular, and you think you can sell it for full price on the first day it’s listed, why settle for whatever you think it is worth? We market the property to get all the interested buyers in one room at one time, competing with one another to buy your property? Then your target price becomes a minimum – not a maximum. The top price is determined by motivated, competitive buyers who know the house will sell today – so they know they better “step up.”
Next time you have a property to sell, think David Ackel “Auctions” first!