The Benefits and Risks of Real Estate Auctions

As many people have discovered, the traditional realtor firm isn’t the only way to sell a property. Real estate auctions are increasingly popular among people who buy and sell properties. As an alternative to the traditional marketplace, “[t]he benefits of selling via auction are particularly obvious during the bidder qualification period.” (Source: “Brokers See Benefit of Auction Process”, National Real Estate Investor) If you haven’t considered the auction route, you should keep the following benefits and risks associated with the auction process in mind. You may find that it suits your property-selling goals.

Benefits of Real Estate Auctions

One of the major reasons sellers seek the auction format is because it often allows them to dictate terms and conditions as well as a deadline. Selling for cash also allows sellers to move forward with their plans without delay once the sale is made. Since roughly 90% of auction sales close, there is every possibility that the deal transaction will close without a hitch–particularly with pre-approved buyers in attendance at the auction.

When it comes to complicated properties, many auction houses actually recommend the use of brokers. This provides sellers with the best of both worlds–the auction format coupled with the selling expertise of the realtors. Often sellers obtain great prices for properties they sell at auction–more than they expected. This is usually because buyers come prepared with a cap and may bid until they reach that cap.

Risks of Real Estate Auctions

While selling properties at auction often results in a great deal, it doesn’t always. There isn’t any guarantee that the price will be bid up by other interested parties. Also, sometimes bidders do not have the opportunity to have home inspections. Buying a home without an inspection is risky for the buyer, so the more inspection information you can present the better. Property sellers “have dozens of decisions and choices on both advisor sale terms and many auction formats.” (Source: “Commercial Real Estate Auctions in Soft Markets”, Heritage Global Partners) It’s important to weigh these considerations carefully. What is the minimum acceptable bid or can the property simply be let go to the highest bidder? These questions must be mulled over in advance.

Sellers who sell at auction have to rely on marketing. While a great auction firm often has regular clientele, some may not do all they can to market your auction. You may want to promote your upcoming sale online or at other venues in order to attract potential buyers to your sale.

Work with a Reputable Auction Firm

When you attend auctions hosted by reliable and respected auction houses, you’ll feel more comfortable about the process and may even find that some risks are mitigated. Many sellers find the auction route liberating. They can plan accordingly because they know what day they are selling their house. Working with a trusted auction firm with experience in real estate is essential for sellers who may be new to the action process.

These are a few of the pros and cons associated with selling a property at auction. Before you make your decision, talk to an auction house that can answer your specific questions and address all your needs.

Source:

“Brokers See Benefit of Auction Process”, National Real Estate Investor, http://nreionline.com/retail/brokers-see-benefit-auction-process

What Are the Benefits of Selling Assets Through Liquidation Auctions?

There are times when it is necessary to make pretty tough decisions as far as our business is concerned. Try as you might, there may come a time when it is necessary for you to exit the business and to do so without merging it, selling, it or passing it on to another individual or entity. When it comes time to exit the business, you are going to need to develop an exit strategy that is well thought out and follows along with a plan that will benefit you to the greatest extent possible. One part of that plan may be selling some of your assets through liquidation auctions. Why is it a good idea to do this?

Before I begin to discuss the benefits of selling your assets through a liquidation auction, it’s important for you to understand that there may be other options that are available. It is always a good idea to discuss any exit strategy with your attorney as well as your accountant before you make this type of move. There may be legal ramifications that are associated with the closure of your business that you have not considered. Your accountant will be able to help you with any financial problems or questions that you may have so that you can exit the business with the least amount of financial impact on your personal lifestyle.

It is also a good idea for you to take a good look at your assets and the inventory that you have available. While it certainly is true that using a liquidation auction is going to be the easiest way for you to sell off your assets, there may also be some items available that would be better sold elsewhere. This is also something that you can discuss with your accountant to determine if there is going to be any financial or other benefit to you when selling those items.

Among the specific benefits of using a liquidation auction, one that is certainly going to be considered is the convenience of doing so. It is likely that you are dealing with a very stressful situation while you are closing your business and the last thing that you would want to do is to add a lot of stress along with it. Using an auction allows you to put the majority or perhaps even all of your assets on the auction block and to have them taken care of in that way. There is still going to be some sorting that will be necessary on your part, but if you don’t have to worry with the stress of selling those items individually, you will fare much better.

There are also additional benefits that should be considered because they can help to relieve you of some of the stress of the situation and to allow you to fully liquidate your assets. Included among those benefits is the marketing that is available to allow you to reach a much wider audience. There is also the certainty that the items are going to be sold and many full-service auctions have a regular following which may be looking for exactly what you are offering. So if the time is come for you to close your business, consider using an auction to liquidate your assets for the financial and stress management benefits that are available.