How to Auction a House

Video Transcript

"So, you've been trying to sell that house and you haven't had much action, and now you're thinking about the auction method of marketing. I'm Blake Kennedy with Kennedy Brother Auction Services and I'm here to help. Selling a house at this time is very difficult, the economy is down, the housing market is done, and you're thinking about doing that auction. And you're not quite sure how that auction method works. Well, it works like this. When you list a house traditionally, you're probably six, five, six, seven percent, whatever it is, you're paying a percent to sell that house. With an auction, they do what they call a ten percent buyer's premium, so that way the buyer is paying all the fees, the ten percent buyer's premium, and they generally ask the seller to pay for the advertising and marketing for that house, depending on the amount of the house and depending on how much marketing you want to do. It's usually a thirty day marketing campaign to get your house sold. There's different ways to sell a house whether it's what we call an absolute. Whatever it brings, it brings. You're done with it, you want to get rid of it, and in thirty days it will be sold and they have thirty days to close on it. That's what we call an absolute auction, it brings for whatever it brings. That does bring the bigger crowds 'cause it brings people out of the woodwork and say, I want a deal on this, and it drives the auction prices up a little bit higher. Then they have what they call a reserve auction. That's where you say, hey I want to put this amount on it, a good auctioneer is going to do his research on the house and make sure he thinks that is a good fair reserve before he even does all the marketing on it because he doesn't want to auction off the house if he realizes the reserve is too high and somebody could buy one in the neighborhood for just the exact same amount. I like to do what they call a writer refusal auction. A writer refusal auctions means the seller has the right to accept that or the right to refuse it. We hold the auction, the auction price goes up, we have a good crowd, and they put down a deposit, the high bidder puts a deposit down, they write up a contract, they might know right then and there that hey, we'll take that price, or they might want to wait that seven days. They know they have a signed contract with money down and they're going to be closed in thirty days. That's what we call a writer refusal, they said this is the best offer we've gotten, we're going to go ahead and take that offer. So, make sure you call up a couple of auction houses in your area and say do you sell real estate? You might want to hire somebody that has done quite a few of them, but you also might want to make sure you don't get one that's just looking to advertise their name, that they're really going to do the due diligence and get - work hard to get your house sold. Good luck trying that auction method of selling. I'm Blake Kennedy."