It works as a quick alternative than using traditional methods of selling a property, and avoids the long time waiting for offers to arrive, or the property to close. Now selling a property in an auction does mean that you will probably have to sell it at a lower price than you wanted, but then how do you know that a future buyer won’t haggle you down. If you end up in a position where you are desperate to move then you probably would accept any offer, and may end up worse off than if you had gone to auction in the first place. So you need to weigh up a number of variables before you decide whether to sell at auction or not.
One thing you must take note of before placing any property up for auction, is that the auctioneer will take a percentage cut of the total sale price. So when placing a reserve it is worth taking this into account.
As part of the auction process, potential buyers all gather together in a single location and bid competitively against one another on the available property. Chances are very high that the real estate will sell on the day of the auction.
Auctions are very beneficial especially if the real estate has some unique aspect, which might be high-level interior features for the location. Many sellers that enjoy participating in real estate auctions are usually motivated to find a buyer for their property and move on.
In addition to that, there will be marketing fees which typically represent 2% or more of the sales price. More than likely you will need to compare the commissions between different auction firms so that you can negotiate the best price. Once satisfied, sign the contract with the specific auction firm that best suits your needs.
It is important to prepare the property to make sure it is ready for the auction. Usually, the agent for the commercial real estate auction house will give you free advice on the best ways to prepare the property for the sale. Sometimes this means that the property needs to be stage. This is where furniture is brought into the real estate that will significantly impress any potential bidder that is looking through the real estate before the auction begins.
In addition to staging, you likely need to rearrange the furniture, decorate or paint the real estate's interior or exterior to make it as attractive as possible. There is a fine line though of spending too much on the staging process that might not be returned during the sale.
So you decided that you would sell your commercial real estate and put it on the market, and then you sat back and waited for a buyer. You waited, a few weeks, which then turned into months, and now a year later you are still living in the same house. You did find a new home to move into, but as you could not sell your own property, you could not free up the finances to buy it so that fell through. So what can you do?
So how do you decide on a reserve price? Well it is the absolute minimum you will take for the property, if you do not think you can work that out then deduct 3% to 5%.Whether your property meets the reserve or not will also depend on which auction commercial real estate you use. For this you need to do a lot research and find out which auction commercial real estate sells the most properties, and what the average price is.
Also, you need to look into which days sell the most properties, maybe they have a day every month that out performs all of the others.
On auction day, you do not need to attend the auction but can choose to instead have a representative there to act specifically on your behalf. The potential buyer that is the highest bidder will place a deposit and allow the real estate to go to escrow.