Selling real estate by auction has positive and negative aspects. Real estate auctions differ from the traditional home selling process in that buyers competitively bid on the property at the same time versus putting in their offers and waiting for a response. More homeowners are choosing to go the auction route. The number of home auctions have increased by about 10 percent since the early 2000s, according to the Kansas-based National Auctioneers Association.
Length of Sale
One of the major advantages of selling real estate by auction is the quick sales process. The entire process, from marketing to closing, can be shorter than 10 weeks, said Pam McKissick, of auction firm Williams & Williams. This gives sellers that are ready to move on from their home a quick way to do so. The sellers knows exactly when their property will sell.
Another advantage of selling real estate by auction is that the closing process can be simpler than during a traditional sale. This is because most auctioned homes are sold "as is," and the bidder cannot easily back out of a deal before closing. There is no negotiating along the way between buyer and seller. Bidders are required to be prequalified so they are prepared to purchase the property.
One negative to selling real estate by auction is that the seller may earn less than he or she wants from the sale. The seller is encouraged to price the house competitively to attract prospective bidders. This may mean a low minimum starting bid or no minimum bid. The buyer determines the purchase price, according to the National Association of Realtors. The home seller will also have to pay a commission on the sale of the house and marketing fees for the auction.
Another negative aspect of the real estate auction process is having to open your home to prospective buyers who want to view the property. While this also happens during the traditional home-selling process, a larger number of prospective buyers may want to enter the house to conduct inspections before the auction.