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04/21/2014
Jessae Carrington had never heard of auctioning a home.
But, after spending almost three years trying to sell a graystone mansion in Chicago she inherited
from her parents, a friend suggested an auction might be a good route.
“This was something brand new to me,” she says adding she didn’t even know it was an option. After
doing some research and interviewing auctioneers she hired one. Carrington admits she started out
a little unsure, but as her auctioneer, Michael Fine, explained the process and began to put together
reports and appraisals and marketing the property she was at ease knowing her property would be
sold by a specific date.
The property sold for more than Carrington expected and she walked away with a profit.
“He did in two and a half months what hadn’t been done in two and a half years,” she says.
Debunking myths
For anyone curious about selling a home by auction, most auctioneers are willing to sit down and
walk through the process.
“It’s an education process for many,” says Rick Levin, president of Rick Levin & Associates, Inc. and
a licensed real estate broker. The biggest hurdle is often diffusing the perception that real estate auctions are only for foreclosures
or are synonymous with getting a bargain.
He says historically farms are sold at auction as well as art, collectibles and cars.
“If people are using auctions to sell their million dollar painting, why not their million dollar condo or
any condo?” he says.
The National Association of Realtors says there are several benefits to sellers utilizing an auction
including buyers who come prepared to purchase and are already pre-qualified bidders.
Additional benefits, Levin says, are the seller controlling the timeline as well as the terms of the
auction.
Three ways to sell
Once auction is chosen as the selling method the homeowner has a few more decisions to make
regarding the terms of the auction. According to Levin, sellers have three options:
Absolute auction or sale without reserve: Sells the home to the highest bidder no matter what that
amount might be. Levin says competition for a property often drives the price up, but this option
often makes sellers nervous because of the unknown.
Reserve sale: This type of auction gives the seller the power to accept or reject any bid. Levin says
sellers like it because they aren’t tied to accepting the highest bid and it allows them to make a
choice.
Disclosed minimum bid auction: The seller sets a minimum bid price and buyers can start their offers
there. Levin says this tends to be most reassuring to sellers.
No matter what method is chosen, sellers typically are asked to pay some fees up front, Fine says.
The fees are used for the appraisal and reports needed to provide to potential bidders. Sellers, he
says, typically recoup the cost in the sale of the home.
Get ready, get set
A benefit of selling by auction is it takes the seller out of the negotiation process, according to the
NAR. It results in less work for the seller and less back and forth.
Another benefit can be in the staging and showing of a home. With an auction, you only have to
have the home show-ready for marketing photos and open house events; there are no drop-in
showings.
Tara Quinn, a marketing and staging adviser with QUINNtessential Staging & Design, has
experience in preparing a wide variety of homes for auction. It isn’t much different than getting it ready for a sale by Realtor, she says.
The main difference, she says, is the sense of urgency in auctions. Since many auctions are finished
within about 45 days there is often a lot to accomplish in a short time.
Quinn says hiring a stager can help expedite the process and can sometimes be easier for the
seller.
“It can be daunting,” Quinn says of decluttering and improving. “There is also an emotional
connection people have to their assets.”
She says people need to “divorce” their home and be willing to take down collectibles, religious
items and sports team memorabilia.
The cost to stage a home varies by how much needs to be done as well as the size of the home.
“You always want to create a homey feeling. Most people are very unimaginative,” she says.
Buyers tend to pay more for a home when they feel an emotional connection.
Sold!
Once the bidding ends and the home is sold there is a closing on the property to transfer the lien,
just like when working with a broker.
Carrington says she was looped into the process by her auctioneer, and other than making
decisions, there wasn’t much for her to do. This was especially helpful because she was out of state.
“It’s quick and you get a fair price. I wish I had found it sooner and I would do it again,” she says.
This is the third in a four part series explaining the residential auction process.
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