To say there are a lot of moving parts to a real estate transaction would be an understatement. Selling your home or other property can be a daunting task and one not to be taken lightly.
The help of a professional who deals solely in these types of transactions often is the best route. Realtors and auctioneers both provide a level of expertise that can help to make the transaction faster, smoother and, most importantly, more profitable. But which one is best suited for you?
I’ll give a few pros and cons for both and try to lean toward neither, because every person’s situation is unique and there is no cookie-cutter approach when it comes to real estate.
Listing with a Realtor
• You pick your price – well, kind of. A licensed Realtor can help you determine a fair asking price based on the current market conditions and how motivated you are.
• Most things are negotiable. This also could be a con for some, I suppose, but if you enjoy the back and forth of wheeling and dealing, then you might find the process rather exciting.
• The time given to vacate the property usually can be tailored to fit your needs.
• Potential buyers are generally screened prior to looking, which cuts down on tire kickers wasting your time with pointless showings.
• It only takes one buyer to come along and fall in love with your property.
• You won’t necessarily know when, or if, your property will sell.
• Unless the market is red hot, the sense of urgency for potential buyers to purchase quickly isn’t as great, especially if there are other comparable properties on the market.
• The purchase contract likely will have several contingencies that must be satisfied for the transaction to be completed. These might include financing, appraisal, inspections or any number of other items a buyer decides to request as part of the deal. Home inspections now are commonplace and might or might not result in a laundry list of repairs you must either fix, compensate the buyer for, or simply say no and risk the buyer walking away. It also should be noted failure to meet a contingency generally will result in the buyer getting their good faith deposit back and you being right back where you were before the purchase contract, except now you’ve wasted several weeks of potential marketing time.
• The time to closing can be somewhat fluid, depending on financing and other factors such as the ones listed above. A cash buyer might close in two weeks while a government-backed loan could take up to 60 days. Repairs required by appraisal or other inspections must be complete prior to closing, which might mean adding a contractor’s ability to get the work done into the equation.
Selling at Auction
• The auction sets a specific date and time the property will sell – or possibly not sell, if there is a reserve price. If the auction is absolute, meaning it will sell regardless of price, then you know on that day your property will be under contract and can plan accordingly.
• Because of the date and time being specifically stated, there is a sense of urgency for potential bidders. A person might drive past a real estate sign day after day and never act, but an auction sign acts as a timer and tells them to move it or lose it.
• Generally, the only contingency in an auction purchase contract is that the buyer will be given a clear and marketable title to the property. Any title issues must be settled in a specified time or the buyer gets their deposit back. Everything else, such as the condition of the property, makes no difference. Inspections and appraisals generally are allowed but have no bearing on the purchase contract.
• The closing deadline usually is 30 days after the auction date and only is extended in the event of a title issue, which needs additional time to be corrected. If for any reason other than a cloud on the title the buyer needed additional time, then it solely is at the discretion of the seller whether to grant the request.
• The price will be what the market determines on auction day. You have the option of a reserve, or minimum price, but an auction with reserve might result in potential bidders not taking the seller’s resolve to sell seriously and not participating in the auction.
• There is very little negotiation in an auction purchase contract. The purchase terms are static and stated ahead of time. A potential buyer either agrees to them or doesn’t bid. The price is determined by competition among the interested parties, but all other terms are set before the auction even begins.
• Closing within 30 days of the auction date is a pro for many but also can be a con if you haven’t already moved or made other arrangements beforehand. If you still are occupying the property, you also can expect to have more people viewing it leading up the auction date. The goal of an auction marketing campaign is to generate a high volume of interested traffic in the limited amount of time leading up to the auction; meaning you might have company on an almost daily basis with people trying to check out the property before the auction date arrives.
• It takes two to tango. For the auction to be successful, you need at least two people who are equally interested in the property to square off and go at it. Ideally, there will be more, but the very nature of an auction relies on spirited competition among interested parties.
The lists could go on and on, but hopefully these points have at least given you a base from which to form your own set of questions to determine which method is best suited for you. Every single situation is unique, and it is important to consider the various factors that potentially could affect the sale of your property prior to going forward.