When you hear of a property going to auction, do you immediately assume that the property is in the hands of a bank or a foreclosure company attempting to recover money lost on a transaction? Many people, especially those who lived through the 1980s when farming was struggling and land values crashed, assume a property, whether it is land or residential real estate, that is going to auction is doing so to recover losses.
Auctioning real estate is a growing trend. Clients interested in selling real estate are quickly figuring out that auctioning real estate is a completely viable option, and not just an option to quickly recoup loss.
There can be tremendous value in auctioning real estate that a traditional real estate transaction does not offer, according to Dirk Talley, broker of Show-Me Real Estate and owner of Talley and Associates Auction Services. Buyers who come to an auction are pre-qualified and ready to buy. Sellers who need to sell a property quickly because of relocation or for other reasons find the auction process much quicker because the closing on the property usually occurs within 30 days of the auction.
Residential sellers are choosing to sell by auction to prevent having to prepare for and deal with multiple showings on the home they are residing in. Instead, they usually host one to two open houses prior to the auction.
Several clients have been pleased with the outcome, because they felt the immediate bidding process and competition in bidding helped them achieve a higher sales price than they might have received in a traditional real estate transaction, Talley said.
“Our company has been asked on several occasions if there is any protection we can offer that ensures the property will not sell below market value during the auction process,” Talley said. “There are protections we can offer during the process that would protect a seller from this happening. The answer is yes, we can offer reserve prices to ensure a satisfactory sales price. However, each property is unique; therefore it’s best to schedule an appointment to discuss all options.”
However, a traditional real estate transaction does at times provide a better option for some residential real estate, Talley said. Unique properties that might be exclusive to a certain type of buyer can be handled better through a traditional real estate listing. First-time homebuyers or buyers with government financing prefer to deal with a traditional listing because of guidelines and restrictions set by the government.
Missouri has been slower than many other states to adopt the auction process in real estate, Talley said. Many states in the Midwest have turned to using auctioning in real estate transactions more frequently than traditional real estate sales.