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Rethinking Real Estate: The Auction Method

Oct 28, 2017 4:23:28 AM

Buying and selling a home through auction is no longer for distressed property. Rather, the highly successful Harcourts Auctions platform focuses on everyday, luxury homes.

Auction is typically understood to be a method of sale used in relation to distressed or bank-owned properties. However, the real estate climate in America is quickly changing as the Auction method is being introduced for use across all luxury markets.

Tried and true, everyday homes have been bought and sold via auction for over 130 years in Australasia, generating over $4 billion in total property value. Now available in America, the auction method is gaining traction due to its high success rate.

Since being introduced by Harcourts in late 2014, over 700 auctions have been listed with a 93% closing rate; 0% of the homes were distressed. Auctions offer a dynamic and completely transparent way of purchasing, completely changing the game in real estate as we know it.

Auction can work on virtually any property. In fact, Harcourts Auctions has seen a 62% rate of expired traditional listings converted to auction, while 38% of the listings are new to market.

An auction listing allows the seller to achieve the best possible price for their property, based on market value. There is no list price, rather a bidding to start from number; sellers also have a non-disclosed reserve price. Potential buyers can focus on what the property itself has to offer. With the reserve price, the seller may accept any offer prior to auction day. If bidding doesn’t reach this minimum price, there is no obligation to sell.

From a buyer’s perspective, a bidder can determine the purchase price representing true market value through competitive bidding. A buyer can tailor their bid according to what others are bidding.

In addition to achieving a high value for the home, the auction sale is a clean, simple, non-contingent contract. All reports and disclosures - traditionally completed by the buyer in escrow - have been completed in advance by the seller. All property information is provided up front in a transparent manner - no surprises!

Homes listed via the auction method have an average days-on-market of 28 days. Over 57% of the properties sold via auction are sold prior to the scheduled auction date. However, if the auction doesn’t result in a sale on or before auction day, the process hasn’t failed. The seller knows exactly how much buyers are willing to pay and the property’s reputation remains intact as the list price has not yet been advertised. When taking a property to auction, the seller is putting a date on the sale of the property, therefore, buyers can have complete confidence knowing the seller is committed.

Overall, Harcourts auction listings receive at least 50% more inquiry than a traditional listing, with every property receiving at least one offer before auction day.

To learn more about the auction method, visit: www.harcourtsauctions.us

Topics: Selling, Buying, Auction