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

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.

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.

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.

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.

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).

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.

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.

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.

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
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.

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.