harVestco Auction Services
An auction can often be the most efficient and timely method for buying or selling either real estate or personal property. harVestco offers tremendous expertise and experience to help clients determine whether an auction is the best marketing vehicle. For real estate in particular, popularity of the auction as a means to buy or sell property has exploded in the last twenty years. Annual sales of real estate via auctions have more than quadrupled in that time. The National Association of Realtors now predicts that within a few short years one in three properties will be sold via auction.
Advantages of selling property at auction include instant liquidity as well as lower sales and holding costs. An auction can typically be planned and conducted in less than sixty days, while the average time on the market for a listed property is nearly a year. Typical savings of ten to twenty percent can be achieved because of the lower closing and holding costs. Finally, the seller can maintain greater control over the process and specify terms of sale, bidding and closing dates, and other details.
Buying real estate at auction also has many advantages. The opportunity is real, there are no prior sales or pending deals, and everyone can participate equally. The selling price of a piece of property is determined entirely by the auction participants, so you can easily see the actual market value by considering the other bids. The transfer of property at auction is usually clean and swift. Since all the due diligence is performed prior to the auction, any contingencies are removed from the sale.
There are three categories of real estate auctions, and each has its advantages in particular situations:
- Absolute Auction (Without Reserve)
- Property is sold to the highest bidder, regardless of price
- Since a sale is guaranteed, buyer excitement and participation are high
- This method generates maximum response from the marketplace
- Absolute auctions are becoming more popular with sellers, including financial institutions and government agencies
- Reserve Auction (Auction Subject to Confirmation)
- The highest bid represents an offer, not a firm sale price
- The seller reserves the right to accept or reject the highest bid
- The seller predetermines the price and is not obligated to confirm anything other than an acceptable price
- Sealed Bid Auction
- This method requires buyers to submit bids prior to the auction
- It allows only prior bidders to enter into the auction process at a future date
- The seller has the opportunity to evaluate bids and potential buyers before the bidding process begins