SELLER CONTROLS CONTINGENCY

Traditional brokerage allows the buyer to exert control over the terms of the sale, including the closing date, amount of deposit, inspections, and then repairs, etc. The auction method places this control firmly in the hand of the seller, eliminating most of the contingencies common in a traditional brokerage sale.

CARRYING COSTS REDUCED

During the time a property is listed with a traditional brokerage, the months or years can have a negative effect on the eventual bottom line of the sale. The costs of mortgage payments, interest, taxes, insurance, maintenance fees, utilities and so on, can really add up. Because auctions are time-defined, this effect is reduced to a set time, and these amounts greatly reduced, thus giving the seller a healthier bottom line.

TIME AND VALUE OF MONEY

An auction’s accelerated marketing and closing dates, allow the seller to get paid much sooner. Since you will receive your money sooner, you can reinvest it sooner, thus making it possible to make yet more money.

SELLER CONTROLS THE TYPE OF AUCTION

There are several basic types of auction.

1. Absolute Auction: This type of auction often brings the most buyers, and can have the potential to bring the most dollars. This type means there is no bottom price for the property.
2. Minimum Bid Auction: The seller agrees to sell to the highest bidder after a pre-set minimum price is reached. Minimum bid auctions provide some protection to the seller on price, and work well when the pre-set minimum is set significantly below fair market value.
3. Reserve Auction: This allows the seller to either accept or reject the highest final bid. These auctions do generate less enthusiasm, and can suppress the highest bid, but do allow the seller some protection on the price that is accepted. If the seller rejects the highest bid, a fee is payable to the auctioneer.
4. Sealed Bid Auction: Bidders have a deadline and all bids must be submitted prior to that deadline. This type is not used often, but can be effective for some types of property.