Luxury homeowners looking to sell their estates face a longer and bumpier road to closing than most homeowners. The most obvious reason is that there is a smaller pool of buyers qualified to purchase homes in this category. Of that qualified pool, many buyers are quite savvy in real estate transactions, prolonging the negotiation phase.
However, the biggest reason that the process can move slower has nothing to do with the personalities of the buyers or the sellers, but the property itself. Similar to selling art, it is very challenging to set a price for unique pieces of property with very few, if any, comparable sales data. It is often difficult to determine the appropriate asking price. In real estate, overpricing by as little as 10% can result in homes being overlooked all together and the property languishing on the market for years. Underpricing can backfire on sellers as well. In an age where other sellers, particularly investors, can instantly see listings and adjust their pricing accordingly, this strategy can often send prices in a downward spiral for the entire community.
More and more affluent homebuyers and sellers are looking to the auction method to cut through the time and stress of luxury real estate transactions. It serves the best interest of both the seller and the buyer.
Sellers love auctions because they are fast, efficient and effective. It is an opportunity to pro-actively market the property in a concise period of time with the parameters of the sale pre-determined. With the quick sale of the home, sellers can reduce long-term carrying costs, including taxes and maintenance. In most cases, there are no contingencies, which makes closing within 30 days or less of the auction date very possible. The seller maintains a high level of control over the process as the selling date, closing date, terms and conditions are all set at their discretion without numerous, unscheduled showings from unqualified buyers.
A well-orchestrated auction employs customized and aggressive marketing techniques to provide maximum visibility of the property to those in the U.S. and abroad that have both the financial means and desire for the property. As buyers come to auction prepared to buy, a competitive environment develops and assures the property will be sold at true market value. Competitive bidding confirms that money isn’t left on the table.
The auction process benefits the buyer equally as well. Buyers purchase in an open and fair competitive bidding process and can rest easy knowing that the process determines a fair market value for the property. Much time is saved, as the buyer is assured that the seller is committed to selling. An auction also eliminates long negotiation periods and reduces the time to purchase the property. The purchasing and closing dates are known, all buyers compete for a property on an equal playing ground and, in most cases, comprehensive property information is openly available.
Some people still associate auction sales with only distressed properties. Although that might have been true in the past, it is absolutely not true today. Owners prefer a cost effective, accelerated method to sell a property for reasons that include estate settlement, investment opportunity, downsizing and relocation.
The allure of potentially selling a home more quickly than a traditional listing allows – and possibly at a higher price – makes auctions an attractive option for sellers. Buyers can bid with confidence that the seller is fully committed to selling and the price they pay will be the true market value. Auctions are the purest form of selling. Check out what all the excitement is about!
