NAR: Auction: Marketing
Real Estate Auctions: Marketing, Advertising, and Other Expenses
Q. How are auction properties advertised?
A. Because the lead time in a real estate auction is generally short, the marketing program must be comprehensive, intense, and targeted to prospective buyers. A specific advertising budget is established to properly expose the property to the marketplace.
Most auction marketing programs will include direct mail advertising (from a black and white postcard to a full-color brochure), print advertising (local, regional, and/or national newspapers, magazines, trade journals, etc.), and signage (attractive, attention-getting signs posted on or about the premises).
Additionally, platforms and techniques such as telemarketing, publicity, radio and TV, billboards are often used by professional auction companies to enhance market exposure.
Q. How much does advertising or marketing cost and who pays for it?
A. Depending on geographical location, value of the property, and size of the marketing area (local, regional, or national), advertising budgets can run from one to four percent of estimated proceeds.
While the auctioneer prepares, coordinates, and places all advertising, the advertising expense is generally the responsibility of the seller and is usually paid to the auction company at the signing of the auction contract.
Q. How long does it take to market the property, have the auction, and close the sale?
A. The timeframe varies, depending on the type of property auctioned. Generally, however, the process takes from six to 10 weeks from listing to sale day. Sellers usually allow buyers an additional 30 to 60 days for closing.
Q. What are the expenses related to an auction?
A. In general, auction expenses include the auction company’s commission, marketing and advertising, and co-brokerage commissions (sometimes).
Typically the auction company charges a commission as a percentage of the sale price. This commission is negotiable.
In addition, marketing and advertising costs are usually paid by the seller and are payable upon signing of the auction contract. A complete marketing proposal should be provided for the
seller’s approval prior to signing.
The auctioneer (or in some cases, the seller) usually pays a co-brokerage commission, either a flat fee or percentage of the sale price, if the high bidder and ultimate closer on the property is represented by the broker who registered the bidder prior to the sale.
