A Hot Strategy for a Cooling Market
As the Market Cools, Auctions Become Popular with Buyers & Sellers
Published: July 1, 2006
The housing boom has ended, leaving many buyers and sellers pondering what to do. How to do it, has also become a mystery because Web sites such as Realtor.com and Zillow.com are making conventional approaches obsolete. Yet, many are finding success with an unconventional strategy – Auctions. No longer a last resort, auctions have become an ideal solution for buying and selling high-end real estate.
Over the past 12 months, the number of listings has risen 30% nationally and listings have increased by as much as 62% in Cape Cod and 75% in Southwest Florida. For many luxury hotspots, this means that now two to three times as many sellers are trying to attract whatever buyers are left.
Listings generate their most excitement and interest during their first month on the market. Therefore, the biggest challenge for sellers is standing out during those first important weeks and attracting more than local area buyers.
With a Grand Estates Auction Company auction, a property goes through an intense advertising campaign that saturates the market and positions a home into the global spotlight. The auction takes place at the end of the campaign when interest has grown to its peak.
What if a property has been listed previously for months or even years? Auctions definitely can renew interest. Karin W. of Arizona found that true when she used Grand Estates to sell her luxury home. “After having watched our house languish on the market for 3 years, it was amazing to move from auction to closing in just 12 days.”
Pricing, Pricing, Pricing
Pricing luxury real estate has always been tricky because the properties are so unique. During the housing boom, many could simply list at 10% more than the sold price of the house next door. However, as the market has cooled, pricing has become absolutely critical.
Overpricing by 10% can now result in homes being overlooked all together. This is because many buyers use real estate Web sites such as Zillow.com for comparisons and Realtor.com to filter out listings, using price as a main parameter. A misstep here could cause a listing to miss its audience entirely.
Underpricing can backfire on sellers as well. Some brokers advise pricing a property in the bottom 25% of comparable homes. However, in an age where other sellers, particularly investors, can instantly see your listing and adjust theirs, this strategy can only send prices in a tailspin.
At an auction, the market determines the pricing, so pricing mistakes are not an issue. Ron W. of Colorado owned a custom-built home with no real comparables and was considering taking less than the appraised value. Instead of listing, he auctioned with Grand Estates. What was the result? He states, “The surprise was an offer obtained by your company three weeks prior to the scheduled auction date for almost $2,000,000 more than realtors said was possible.”
More Options, More Work
Traditionally, this is a good period for buyers, giving them more options. However, more options require more research, and acquiring the due diligence for each property can be very time consuming. In addition, there is no telling if and when properties under contract will close. So many buyers waste valuable time tracking properties with no idea if they should continue or focus on another.
With auctions, buyers come with the work already done for them. They have access to appraisals, inspection reports, surveys and tax records before the auction, helping them make an informed decision. Because the auction is held on a specific day and all sales are final, there is no need to maintain a constant vigil either. Buyers simply register and bid in person or by phone. “I love auctions!” says Steve T. of Colorado who participated in a recent Grand Estates auction. “It’s the only way I buy property!”
For more information about upcoming auctions or selling your luxury home at auction, contact Grand Estates Auction Company at 1.800.552.8120.