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Sell Your Home Like a Celebrity - Why Putting Your Home up for Auction May Get it Sold Faster

Updated on August 15, 2016
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Marlene is a California real estate broker who has been selling property since 1989. California Real Estate License number 01056418.

Many luxury homes are sold through auctions. Choosing to sell your home by auction may get it sold faster.
Many luxury homes are sold through auctions. Choosing to sell your home by auction may get it sold faster. | Source

Auctions Are Fun But They Get the Job Done!

I’ve never been to an auction that wasn’t filled with fun, food, and lots of people scurrying around having a good old time. Yes, auctions are fun, but the main purpose of auctions is to sell the product. Buyers are there to buy and sellers are there to sell. There’s no rule that says you can’t have fun in the meantime.

Unusual homes, such as luxury homes, resorts, exotic, and historical homes are ideal types of homes to be sold at auctions. Celebrities typically have homes that fit into the unusual, luxurious, or exotic category. Because of the uniqueness of the home, and the need to attract unique buyers to the home, REALTORS® who serve celebrities may choose to sell the home using the auction method of selling.

Deion Sanders

Click thumbnail to view full-size
Deion Sanders - Sports AnalystDeion Sanders - Football PlayerDion Sanders - Baseball Player
Deion Sanders - Sports Analyst
Deion Sanders - Sports Analyst | Source
Deion Sanders - Football Player
Deion Sanders - Football Player | Source
Dion Sanders - Baseball Player
Dion Sanders - Baseball Player | Source

Celebrity Deion Sanders Sells House at Auction

Celebrity Deion Sanders' 29,000 Square Foot home sold at auction for almost $4 Million in a no reserve auction. Imagine the excitement at an opportunity to purchase this home located on over 100 acres. Deion Sanders is a Hall of Fame football player and baseball star who also works as an analyst for CBS Sports and the NFL Network.

The auction was handled by Concierge Auctions and Briggs Freeman Sotheby’s International Realty. According to attendees, there were eight registered bidders. For more information and to get the genuine scoop on the details, visit Candy Evans’ blog. Cindy Evans is a real estate news specialist and comments on interesting news happening in the state of Texas where Deion Sanders' home was located.

Before the Auction

Auctions are heavily marketed to bring buyers to the property so that by the time a home has made it to the auction block, the hard work has been done. The marketing material has been handed out, the ads have been posted, the radio announcements have been aired, the television commercials have been played. Yes, by the time auction day arrives, all the hard work leading up to the auction has been completed. The buyers are in place, ready to bid on the house they came to buy.

No Reserve - Absolute Auction as Applied to Deion Sanders' Auction

A no reserve auction is an auction where the owner sells the house to the highest bidder without stating a minimum acceptable price. What this means is that if one bidder shows up and bids $1 for the property, and if there are no other bidders, then that bidder would, in essence, be the highest bidder and win. It could happen! But, the very nature of auctions prevent most homes from selling at such ridiculously low prices. Think about it… if you could get a 29,000 square foot house for only $2 why wouldn’t you outbid the last bidder. So, bidders continue bidding until the highest bid wins. In Deion Sanders’ case, the highest bid was somewhere just under $4 Million.

Types of Auctions

There are three distinct types of auctions that sellers may use to sell their property.

  1. Absolute Auctions
    With an absolute auction, the property is sold to the highest bidder, regardless of price. The absolute auction is also known as a “no reserve” auction. This type of auction generates the highest level of excitement because no matter what the final price ends up being, the bidder who places the highest bid wins.
  2. Minimum Bid Auctions
    With a minimum bid auction, the minimum acceptable bid is stated up front so bidders know that if they want the property, they must at least bid the minimum price listed in the brochures and advertisements for the property. This minimum price is also announced at the beginning of the auction.
  3. Reserve Auctions
    With a reserve auction, the price is not announced. Only the seller and the auctioneer know what the seller’s minimum acceptable offer is. The seller reserves the right to accept or reject the highest bid (within a specified time following the auction).

    The bidding starts and if the minimum acceptable offer is reached through the bidding, the sale then becomes an absolute auction because at that point, the sale now goes to the highest bidder (with the acceptance and confirmation of the seller).

Going once, going twice... Sold!
Going once, going twice... Sold! | Source

The Benefits of Auctions

The National Association of Realtors (NAR) describes a real estate auction as an “innovative and effective method of selling real estate”. NAR also considers auctions to be a win/win proposition for buyers, sellers, and REALTORS alike.

The following table of The Benefits of Auctions is a compilation of information used with permission from the National Association of REALTORS.

The Benefits of Auctions

Buyers come prepared to buy
Smart investments are made as properties are usually purchased at fair market value through competitive bidding
Generates a list of ready, qualified buyers
Quick disposal reduces long-term carrying costs, including taxes & maintenance
The buyer knows the seller is committed to sell
Offers clients and customers new selling and purchasing options
Assurance that property will be sold at true market value
In multi-property auctions the buyer sees many offerings in the same place at the same time
Increases revenue and market share
Exposes the property to a large number of pre-qualified prospects
Buyers determine the purchase price
Develops your own market niche
Accelerates the sale
Auctions eliminate long negotiation periods
Assurance that property will be sold at true market value
Creates competition among buyers—auction price can exceed the price of a negotiated sale
Auctions reduce time to purchase property
Property is sold within a relatively short period of time
Requires potential buyers to pre-qualify for financing
Purchasing and closing dates are known
Exposes the property to many potential purchasers
The seller knows exactly when the property will sell
Buyers know they are competing fairly and on the same terms as all other buyers
Auctions bring people in to look at all your listings, not just the auction listing
Eliminates numerous and unscheduled showings
Buyers receive comprehensive information on property via due diligence packet
Successful auctions result in referrals and return business
Takes the seller out of the negotiation process
Agents can earn commissions as referring agent/broker, cooperating agent/broker, or as the listing agent/broker
Ensures an aggressive marketing program that increases interest and visibility

This Benefits of Auctions list is used by permission of the National Association of REALTORS.

What Properties Are Suitable for Auctions?

Generally, auctions are reserved for selling high-end homes. That’s true, but I have sold a number of "average" homes through auctions. It is a process that, when used properly and for the right property, can lead to successfully getting a house sold in a short period of time.

The properties that do well at auctions take three things into consideration:

  1. The Market
  2. The Seller
  3. The Property

The NAR suggests that when making a decision about whether or not a property qualifies for an auction, apply a rule where the property meets two out of three things mentioned above. All things need to be considered, of course, but when making a decision about selling a home by auction, take note of the things that make a house auction-worthy. The more categories that describe the house, the stronger the possibility is that the house will do well at auction.

Demand and Supply Concept

For more in depth information about what a seller's market is, please read my hub titled, "Understanding Real Estate Demand and Supply for Buyers and Sellers".

  • The Market
    Generally, we want to be in what is considered a seller’s market. A seller’s market is when demand is high and there aren’t a lot of homes on the market. Sellers are able to get a fairer price for their property when there are a lot of buyers wanting to buy their property.
    Also, when the market is changing from one type of market to another and buyers are looking for a particular type of property but not finding any to buy at the time, this is a favorable market for auctions.
  • The Seller
    The seller must be motivated to sell the house. A lot of things can motivate the seller – loss of employment, a relationship break-up, moving, financial problems; the list goes on, but the main factor is that the seller has a need to sell the property and does not want to wait a long time to get the house sold.
  • The Property
    The property should have at least 25% equity. Having equity in the property allows the seller some flexibility with regard to the ultimate price the buyer offers.
    Another beneficial factor about the property is that it should be unique. Luxury homes tend to fall into the unique category.

Let’s Start the Bidding!

Once the buyers have gathered in front of the auction podium and the auctioneer starts the bidding, a house is usually sold in as little as five minutes.

The Auction Chant

The auction chant
A friend of mine was kind enough to record this auction chant for me. This is an auctioneer starting a bid for $500,000 and ultimately selling the home with a final bid of $630,000. At this auction, the buyers were on location at the property, as well as, online to place bids remotely. Listen to a professional auctioneer successfully sell a house at auction. This particular house sold in one minute and thirty nine seconds!

Disclaimer: This video is mainly audio. I created it this way so you could hear the auction chant without the clutter of visual effects.

The Auction Hammer

SOLD! Once the auction hammer, also called a gavel hits the sounding block, the deal is done. The house is sold.
SOLD! Once the auction hammer, also called a gavel hits the sounding block, the deal is done. The house is sold. | Source

Sell Your Next Home at Auction

So, if you have a desirable home in a desirable location AND if you have realistic expectations and want to sell your house at a fair market price, then selling your house using the auction method may be a great solution to get your house sold fast.

Visit the National Auctioneers Association (NAA) website to find additional information about auctions and to find an agent who is competent to sell your home using the auction method of selling homes.

"Real estate made easy!"
Marlene Bertrand maintains a current Broker/REALTOR® status.
Calif. Bureau of Real Estate Lic. #01056418.

© 2013 Marlene Bertrand


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