Real Estate Auctions: A Modern Selling Strategy

Real estate auctions have been traditionally used in selling off foreclosure properties. Properties would be put up for sale through auctions when the market was depressed and home owners were cutting their losses. But once the market became stable again, sellers preferred to revert back to traditional methods.

Selling real estate through auctions has been in practice in the South and the Midwest for a long time. In recent times it is being used in many parts of the country and indeed the rest of the world.

Auctions are now being used to sell off unsold units in buildings as well as properties that have suffered foreclosure. This sales strategy is gaining popularity because of the changing scenario. On the one hand there are several new property developments coming up and on the other, consumers are getting more comfortable with the concept of auctions due to familiarity with online auctions and the popularity of sites like eBay.

Experience shows that auctions can be advantageous to both sellers and buyers.

The seller or the property developer gets the option of disposing of several units at the same time. He does not have to wait for months looking for a sale. While he may get less for the property than if he had waited, the saving in carrying costs balances out the loss. Further the developer is usually protected by a reserve price or a basic minimum price below which the property will not be sold. Through auctions the developer not only gets to increase his sales but he also gets exposure for the building and creates a sense of urgency in the buyers.

On the other side, the buyer too can find auctions beneficial. The auction provides an opportunity to strike a profitable deal and get a good discount on the property. The buyer also gets a definite date by which the property will be sold. With the present condition of the real estate market and the rising numbers of foreclosures auctions are proving to be an attractive option. However, buyers tend to opt for smaller units when they attend auctions. But if they want something more substantial they prefer a one-to-one sale, which is more private.

The auctions have evoked mixed feelings in the real estate market. Many feel that this is a viable option only when the market is depressed and other stronger sales strategies can be more effective when the market is healthy. Others feel that the popularity of the auctions is a passing phase. Proponents of the auction method however feel that this strategy gives a whole new approach to selling real estate. Realtors would benefit as auctions are a useful way to bring a lot of buyers together at the same time and they give the developer a chance to show case the property at its best.

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