Auctions & Effects on the Surrounding Property

Auctions expose many qualified buyers to a market.

A well-marketed auction can bring fair market value or better to a property in a timely manner. Auctions bring buyers to a market even when current economic standards make selling real estate a challenge. Bobby Colson of Bill Colson Auction and Realty in Nashville insists more people are turning to auction because it offers a fast and fair marketing tool. Surrounding property owners are often benefited by a fast efficient sale and intense marketing.

Attracts Serious Buyers

Auctions bring buyers and sellers together in an efficient process. Try not to assume the worst when an auction sign displays in your neighbor's yard. Smart investments are made when well-informed buyers purchase property at fair market value through competitive bidding. Robert Frost said that good fences make good neighbors. Auction experts will give the opinion that smart investors make good neighbors.

Increases Traffic

Experienced auction marketing firms create extensive advertising campaigns targeting the property's market. Adjoining property owners, investors and interested buyers are well-informed and prepared to buy. Numerous qualified buyers will examine the target market and neighboring properties at the same time. Thus, surrounding properties decidedly benefit from increased traffic, advertising and fair market evaluation.

Quick Improvements

Auctions provide quick turnaround.

The auction process demands a new owner for a property in less than sixty days. Property improvements can thus be easily scheduled in an orderly process. Improvements mean increased values for adjoining properties.

Exceeding Market Value

Competition among excited bidders can increase the market value.

Investopedia Financial Directory defines fair market value as the price a property or asset would fetch in the marketplace subject to two conditions. One, the buyers are well-informed, perusing in their own best interests and feel no pressure or undue force to trade. Two, the seller and the buyer are given a sufficient amount of time to settle the transaction. If these conditions are met, then the value of the property will reflect an accurate valuation of its worth. Auction marketing provides the best assessment of these two conditions. Intense area-focused marketing plans prepare well-informed bidders. The sale date is heavily advertised and exact. Closing typically is within thirty days with no contingencies. Open competition creates excitement among bidders and often commands a sales price exceeding appraised value.

Supply and Demand

Supply and demand affects a property market. Competition of the same buyers for large supplies of similar properties reduce the price. Sufficient buyers for a property is determined by the differences in properties offered. An auction effectively reduces supply while offering unique property to a large number of buyers. Adjacent properties are rarely affected negatively by auction. However, the auction of an entire neighborhood of very similar properties would overrun supply.

References

• Tennessee Auction Commissioner, Bobby Colson, Bill Colson Auction and Realty
• National Auctioneers Association
• Investopedia Financial Directory
• The AuctionGreers, Real Estate Auction Specialists
• National Association of Realtors
• Foreclosure's Effect on Upscale Neighborhood

Resources

• Real Estate Auction Can Bring Fair Market Quickly
• Do Auctions Really Work?
• The Auction Method of Equitable Distribution