In the U.S., we've traditionally thought about the auction process as "the sale of last resort". Selling real estate at auction evokes images of a property being sold to this highest bidder on the steps of the county courthouse. Over the past few years, everything has changed. For many sellers, the auction process has become a convenient and efficient alternative that is vastly superior to the way homes are commonly listed and brought to market. This has long been the case in Europe and other parts of the world. The U.S. is finally catching up.
Why is the Auction Process Better for Luxury Homes?
In a limited local geography, the pool of potential buyers for a luxury home is likely to be limited. To find a qualified buyer, you're likely going to have to market a property regionally, nationally or even globally. Especially in the current interest rate environment, you may have to look to the Middle East or Asia to find prospective cash buyers for your multi-million dollar home. Your typical local real estate agent simply doesn't have the resources or capabilities to effectively market your home around the world.
6 Reasons to Choose a Sale by Auction
Other reasons why luxury sellers are choosing the auction process are driven by the way the process has evolved. Here are six features of the process that strongly appeal luxury home sellers:
A Short Defined Timeline
Sotheby's Concierge Auctions offers an auction sale that is 60 days in length, from the initial marketing push to closing day. With a traditional sale, luxury properties can sit for months and even years, waiting for that unicorn buyer. Sellers often agree to price reductions in hope of hastening the sale, meanwhile expensive monthly carrying costs continue. With an auction sale, you can literally pick a date and know with certainty that 60 days later, you'll be moving on.
Luxury home sales can often be complicated with contingencies. Offers are made contingent on home inspections, appraisal or financing -- any of which can fall through on the way to closing. With an auction, buyers are forced to do all their due diligence before the auction. When they bid and win on auction day, the sale is final, and you are done selling your luxury home.
Access to a Global Network of Ultra High Net Worth Buyers
Auction houses like Sotheby's already have a global database of ultra-high net worth individuals. Your property is directly marketed to the most qualified audience possible.
A Higher Return
Sellers often net a substantially higher return with an auction sale. With a traditional sale, qualified prospective buyers come along infrequently and have no incentive to move quickly. The auction process forces prospective buyers to compete driving up the final sales price. The shorter sales cycle also means less carrying costs and maintenance, resulting in a higher net return.
A Luxury Experience
The auction process has been designed as a convenient luxury experience. From the moment you engage Sotheby's Concierge Auctions, you are assigned a dedicated project manager who is solely focused on your property. An entire marketing team is devoted to a executing a comprehensive multi-channel marketing campaign to create awareness of your property globe. These campaigns include digital advertising, email campaigns, print ads and signage. You can sit back and relax or get started working on your new life in a new place, knowing that every detail will be attended for you.
You Can Still Work With Me - Your Local Agent
One of the best things about the Sotheby's Concierge Auctions is that you still get to work with your local Sotheby's International Realty agent. The auction process is thoroughly integrated with Sotheby's International Realty. You still have me as your advocated to ensure that local knowledge is incorporated in the marketing of your home. You still have a local advocate who will oversee everything and be accountable to you in person.
How is the Final Sales Price Determined?
One of the most common questions people have is about how the final sales price is determined? Where does the bidding start? Does my home get sold at any price if there aren't enough bidders? There are two auction formats:
Without Reserve - The property will sell to the highest bidder on auction day. There is no minimum bid that must be exceeded to purchase the property.
Reserve - The property will sell at or above a pre-determined price threshold on auction day. In the Reserve format, the auctioneer will use a Counter Bid to move the bidding closer to the Reserve price. Counter bidding is common practice throughout the auction industry to help buyers and sellers reach a price that works for both parties.
What are the Costs of an Auction Sale?
Sellers do not pay an up-front Engagement Fee, but are responsible for the title search and title insurance. Buyers pay a premium on the high bid amount and any applicable transfer fees. The seller pays broker commissions.
The process works very well, I've been through it. But don't take my word for it, listen to these testimonials from recent Sotheby's Concierge Auctions clients:
How to Get Started
If you think an auction sale may be appropriate for your property, please give me a call. I am experienced and have been trained and certified on the auction process. Contact me for a free and confidential consultation.