How Real Estate Auctions Help Buyers In A Seller’s Market
The current real estate market is extremely competitive. It's a seller's market. Home inventory is low, and buyers are left making blind offers, hoping the seller will accept. For this reason, auctions are increasing in popularity.Auctions provide a transparent process for those both buying and selling real estate. In a seller's market, the seller holds most of the power. But with auctions, that power is more balanced for buyers.
Many potential buyers may not realize buying real estate at auction is one of the fairest ways to purchase property.
Imagine the frustration of seeing your dream home for sale, but before you can request a showing, another buyer has locked in the deal.
With a private listing scenario using a MLS, home buyers don't know what other interested buyers may offer. At best, home buyers and their agents find out of multiple offers and can resubmit their highest and best offer, albeit still blindly.
In a competitive seller's market, many buyers offer well over list price on homes in order to win. Some buyers even forego inspections and waive all financing contingencies to make offers more appealing. But, even then buyers can be beat out by other offers that carry escalation clauses (a real estate contract that lets a home buyer say: “I will pay X price for this home, but if the seller receives another offer that's higher than mine, I'm willing to increase my offer up to Y price”).
This market leaves home buyers wondering if they overpaid or are open to risks by foregoing inspections.
On the other hand, bidders at a real estate auction are on a level playing field. Auction bidders are fully aware of other buyers' offers, and all bidders must abide by the same terms and conditions. Typically, auction companies conduct bidding either at the property or in an online-only auction.
Most properties are available for showings prior to the auction and are open for inspections before the bidding begins. Bidding is open to anyone. Bidders know the current bid and next bid increment. To be the successful buyer, you just need to be the last bidder. Upon a successful auction, the buyer pays the deposit and has 30-45 days to close on the property.
Auctions are the most fast, fun and transparent way to sell anything on the market. And let's be honest, all buyers could use a little more fun in their home buying in a frustrating seller's market.
Sellers deserve absolute certainty when it comes time to selling their most valuable assets; likewise, buyers deserve a fair opportunity to purchase real estate and there's no fairer way than at an auction.
Jay Cash, BAS, CES, James R. Cash Auctions & Real Estate, contributed to this article.
To find an auction professional near you, visit faa.auctioneers.org
Further information from Inspection Support Network.