Real Estate Auctions
Here
at Hiller Auction, We believe the trust indicator of current market
value is a properly
promoted Real Estate Auction. That being said,
we realize that not all sellers are willing or in some cases
even able
to sell their property for the current market value. We do not offer
our sellers false hope just to get our sign in their front yard. We
would rather be honest with you and lose the auction than make your
situation worse.
The
majority of our Real Estate Auctions are sold with a buyers fee. It is the
seller’s choice whether to charge a buyers fee or pay commission. Sellers
who choose to pay commission often add the cost of
commission to their minimum
selling price. Our thought is, if you are going to raise your minimum selling
price to include commission, why not just charge a buyers fee? The thing that
never changes is that
buyers care about how much they are going to spend and
sellers care how much they will receive.
It’s the bottom line that is
important to both, not how we get there.
There are three types of real
estate auctions. They are:
Absolute
Auction: In an absolute auction, the property sells to the highest
bidder regardless of price. These auctions typically have the highest number
of bidders because they know if they are the high bidder they will win the
property. They are also the most stressful to the seller. There is always the
fear that no one will show up and they will have to sell for pennies on the
dollar. Buyers like absolute auctions because the seller is obligated to accept
their bid. The reality is that when all interested parties attend an auction
the final bid is the current market value.
Reserve
Auction: In an Auction with reserve, the seller reserves the right to reject
the final bid. By law, unless stated differently, all auctions are reserve
auctions. This is the most common real estate auction. It takes much
of the stress off the seller. They set their minimum selling price when they
sign the auction contract. If on the day of the auction they decide to accept
less they can, but they do not have to. As in an absolute auction, when all
interested parties attend an auction the final bid is the current market value.
The drawback to this type of auction is that a potential buyer might not take
the time to come to the auction because they assume the seller won’t
accept their high bid. Just because a seller doesn’t choose a absolute
auction doesn’t mean they want more than their property is worth. If
you are a serious buyer you should make time to attend a reserve auction.
Minimum
Bid Auction: In a minimum bid auction there is a required opening bid that
is the seller’s minimum selling price. Once the bidding starts at that
price, the property sells to the highest bidder above that amount. This is
the least common type of real estate auction. The only time we suggest a seller
use this type of auction is if they have had the property on the market and
overpriced. We use this type of auction to let the buying public know you are
now willing to take less than previously advertised.
These
definitions are pretty straight forward. You will never see Hiller Auction
Service use phrases such as “Absolute subject to estate confirmation”
Or “Minimum opening bid $10,000” when we know the seller
won’t sell for that amount. We feel these practices are at a
minimum unethical. We are a Minnesota company. Dan Hiller is a licensed
Real Estate Broker and Kevin Hiller is a licensed Real Estate Agent.
Our purchase agreements and other real estate forms are provided by
the Minnesota Association of Realtors. We intend to be in business,
in Minnesota, for years to come.
If
you would like to hear more about the advantages a Real Estate Auction has
to offer, call for a no cost no obligation consultation. If you are a potential
buyer planning to attend a Real Estate Auction and would like representation
that understands the auction process, please give us a call. |
