REALTOR® Magazine-Daily News-Not Doing Auctions? You're Missing Out

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Daily Real Estate News | May 18, 2007 | Not Doing Auctions? You're Missing Out
WASHINGTON – Real estate auctions generate buzz, create a sense urgency for a sale, and even sparking bidding wars for properties that otherwise could stagnate on the market, says auction expert Valerie Gehringer of Keller Williams Realty, Winchester, Va.

Gehringer spoke to REALTORS® on Thursday during the Midyear Legislative Meetings & Trade Expo.

While auctions are hardly a new home-sales technique, the real estate industry has taken more notice of it in recent years. Residential real estate auctions grew by 12.5 percent in 2006, making up the fastest growing sector of the auction industry, according to the National Auctioneers Association.

Does this mean you should you add real estate auctions to your list of services? If you don’t, you’re “at risk of being left behind,” Gehringer said. “Auctions are another thing REALTORS® can put into their toolkits to offer their clients every viable method of buying and selling.”

Start the Bidding

Auctions can draw pools of potential buyers to a property, especially when the bidders perceive that they’re getting a deal, Gehringer said.

“Agents and sellers can use the competitive edge that auctions generate to maximize the return,” Gehringer said. Case in point: At one auction, a townhouse’s market price in the $250,000s skyrocketed to the $400,000s after a bidding frenzy, said Gehringer, who does 80 percent of her real estate transactions with auctions.

Three main types of real estate auctions are:

Absolute auctions. Properties are sold regardless of price to the highest bidder.
Minimum bid auction. A minimum published price is set that guarantees the property will not be sold for anything less than that number.
Reserve auctions. A minimum price is set by the seller that is not disclosed to the public. The seller reserves the right to accept or reject the highest bid.

While real estate auctions are growing, some in the industry still view auctions as a last resort, said Lynn Gardner, 2007 NAR Auction Forum vice chair. If real estate professionals had a greater understanding and education about auctions, they’d think of auctions not just as a way to unload hard-to-sell or foreclosed properties but as an efficient way to get a home sold in any market, Gardner said.

Learn more about auctions and how you get training to do it on REALTOR.org.

— By Melissa Dittmann Tracey for REALTOR® Magazine Online