How To Auction Off Your Home

Added December 17, 2006 by Ilyce R. Glink

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Summary: Wondering how to auction a home? A reader is thinking of auctioning off his home to avoid the hassle of continually having it in showcase condition. Here's how to go about finding a good company to assist with the home auction.

Q: We live in South Florida and have recently bought a place in Gainesville. We do not really have the patience to wait 4 to 7 months for an offer on our house and want to avoid open houses since we work out of our home.

A few local real estate brokers have added auction specialists to their staffs, and from what we've heard, the process has worked out well for most sellers. We would have to pay an upfront advertising fee and we're aware that the buyer would have to pay an additional 10 percent above an accepted bid.

We bought our house over five years ago and plan to offer it well below market value but would still make a pretty good profit. Many friends have encouraged us to hold out for top dollar as long as we're not in a big rush to move, but they don't understand that constantly showing the house or getting ready for showings, especially with the slow market we have down here, really disrupts our working schedules.

What are your views/advice regarding the auction route?

A: What's interesting to me about your letter is that it reflects an awareness among sellers that they no longer have to accept the status quo when it comes to selling their home.

For people who want to wait it out, and hire a full-service broker, that can be a good option. For those who think they can sell it themselves and save the commission, there are technological options that have made this a much easier process.

And for people like you, who don't necessarily want to do it themselves but also don't want to disrupt their business lives, the auction process might be a very good choice.

Now that you've made this decision, you need to think about the best company that can assist you in the auction process.

I would encourage you to check out an auction company that handles real estate for sale full-time, and then compare that pricing to what you're being offered by local Realtors.

But there are other factors to consider besides price. If I were auctioning off my house, I'd want to go with someone who knows how to advertise it, and how to sell it, and has conducted countless auctions over time.

I'm aware that the buyer would have to pay more, but I don't know if all auction houses in your area would require you to pay an upfront advertising fee. It might seems excessive particularly if the auction method does not work out for you. After all, if they sell it, they're getting a 10 percent commission instead of a 5 percent commission.

I'd also see what auction rules they use. Do they require you to take whatever offer comes in, or will there be a floor price? Can you withdraw the house at any point? What are the penalties for doing so? Typically, you can to put down a big amount of cash and sign papers at the auction, with the closing to follow shortly thereafter. Be sure you understand the time constraints so you know when you have to be out of your house.

Until you've searched other out auction companies and found out what they do, I wouldn't sign any contracts. And, when you've decided which company to use, I'd have your attorney look over the contract and walk you through it so you understand how it all works.

One last suggestion, you might want to talk to a couple of real estate agents in your area and discuss the possibility of a very short term listing agreement. You could list the home for a week or two with that agent, price it below the market, have a rush of people look at it and hope that it sells. It might end up netting you a higher price (with a lower commission) and if it doesn't work out, you can always use the auction route.

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