Introduction (POWER POINT SCREEN 1)

When people think of auctions, most often they think of antiques, rare collections and household items such as furniture and dishes. But truth be told, most every item imaginable has been sold by the auction method (POWER POINT SCREEN 2) including business equipment, artwork, livestock, industrial machinery and automobiles.
Can you guess what is the most rapidly growing areas in the business? If you guessed any of the ones I mentioned, you're wrong. The most rapidly growing auction area is real estate. (POWER POINT SCREEN 3) That's right - buying and selling homes and property by the auction method of marketing is becoming more widespread each year. In fact, I didn't include it in my list because it deserves to stand on its own.

Current Statistics
Statistics produced through a research study commissioned by the National Auctioneers Association show that in 2006, (POWER POINT SCREEN 4) auctions of residential real estate and commercial, and industrial real estate had estimated gross sales revenues of $28.1 billion. And auctions of land and agricultural real estate topped that at $25.3 billion in estimated gross sales revenue.
In terms of growth, these three real estate areas all saw tremendous growth in since 2003. (POWER POINT SCREEN 5)

An Option, Not a Last Resort

So what has led to this rapid growth? Well, a number of factors.
Changes in the real estate industry at both the residential and commercial level have set the stage for growth and wider acceptance of auctions. Until the 1980s, auctions labored under a negative image as the real estate industry's last resort for distressed property. (POWER POINT SCREEN 6) The turnaround started with the recession of the 1980s when auction firms proved that auctions could succeed where traditional real estate methods failed.
This trend quickly caught the attention of the National Association of Realtors and they began to recognize auctions as a viable sales and purchase option. Today NAR has a section dedicated to real estate auctions on its web site as it continues to see the value of using the auction method of selling real estate to its one million plus membership.
Another source of growth comes from the widespread economic influence of the baby boomers. As a generation, boomers are inheriting at an unprecedented rate in history, and auctions offer a faster and more viable method of liquidating assets.
Online auction sites have contributed to the growth of the industry. eBay and Yahoo! have brought widespread media attention to auctions as a mainstream method of selling.

What Type of Real Estate is Sold at Auction?

Now, just what type of real estate is sold at auction? (POWER POINT SCREEN 7) Well, as I said before, it is not just distressed property, as once was the case. But auctioneers do handle a significant amount of foreclosures on homes and businesses.
However, more and more sellers are making the choice to sell their homes and personal property by the auction method. Sometimes sellers do this for properties that are hard to value, like waterfront homes, ranches and homes with historical significance.

Though many properties that go up for auction have never been listed in the market before, some have and have not sold and that's why sellers opt for the auction method. I always tell realtors that when a listing runs out, tell your client it's time to consider an auction.

Auction Advantages

Well, I've given you some background on how the real estate auction business is growing, now let me tell you some of the advantages of selling real estate through the auction method. (POWER POINT SCREEN 8)
Quick Turnaround Time. Probably the number one advantage is the quick turnaround time auctioneers offer. An auctioneer almost guarantees a sale within 90 days, and most sales are complete within 30-45 days. And the sale itself is done within a day. For some the bidding lasts only a few minutes, although there have been plenty of instances where bidders have become involved in a “bidding war” lengthening the time of the sale, and hiking up the price of the property. But that's also an advantage - to both the seller and auction company. In short, auctions are perfect for individuals or businesses who have a deadline to sell their property, but want a competitive sale.
There's No Limit on the Final Sales Price. This is, indeed, an advantage. With traditional real estate sales methods, sellers run the risk of overpricing their property and seeing very little interest. Or, they run the risk of underpricing their property and selling it for much less than it is worth. At an auction, the price is determined by the highest bidder and there is no cap on high bids.
Sellers Know When Their Property Will Sell. Long listing periods for real estate can be avoided if you sell your property at auction. When the auction date is set, you know exactly when your property will be sold. And if it's your home you're selling, you don't have to hassle with that endless flow of people inspecting your home at any possible day and hour.
No Contingencies. Property sold by the auction method is sold without contingencies. This means the property is sold “as is.” Prospective buyers are given time to view the property prior to the sale so that they can make an informed decision. Sellers do not have to worry about the “closing” being held up because the buyer is trying to qualify for a home loan or must sell his or her own property before he or she can buy theirs.
Comprehensive Marketing. Auctioneers are well-versed at marketing a number of goods to the public and they have a client list at their disposal. The advantage here is that the real estate will get marketed to a number of potential buyers that it wouldn't have been marketed to otherwise.
Comparable Commissions. Did you know that commissions on real estate sold at auction are right in line with the traditional sales fees as to what the seller is charged? So it's not any more expensive to sell a home at auction.
Excitement of the Sale. Nothing compares to the atmosphere and excitement of an auction. A good auctioneer's chant can get the crowd revved up and keep their interest and that's why people flock to these types of sales. (Give the crowd a sampling of your auction chant.)

Success Stories
Many success stories exist about auctioning real estate. (POWER POINT SCREEN 9) Here are a few examples: (Give some of your own examples or use the following.)

¨ An auction group out of Massachusetts sold the historic Glimmerstone property for over $1 million after it had been listed with a local broker for $850,000 for more than a year.

¨ In Naples, Florida, Villa Bellagio, a luxury home overlooking the Gulf of Mexico, sold for $2.9 million in an auction that drew 11 bidders from Florida, Michigan and Illinois. More than 125 people gathered at the Mediterranean style home for the sale.
¨ Seventy Oaks Ranch, a 273-acre cutting horse ranch, sold for $2.7 million after a two-hour bidding war by 28 registered bidders.
¨ The Michigan childhood home of singer Madonna, sold a few years ago at action for $364,100. It had an appraised value of $200,000.
¨ Then there is the story of the woman who was left with a costly Rhode Island waterfront estate after her husband died. Rather than list it with a broker, she hired an auctioneer because she didn't want the uncertainty of listing the home. It sold for $1.7 million, $500,000 above its appraised value.

Though many of the examples I gave you show a larger that expected profit for the seller, this is, of course, not always the case. But it happens more often than you would think. And how often does a home listed by the standard real estate method sell for more than the asking price? Very, very rarely, if ever. (POWER POINT SCREEN 10) Typically houses are auctioned off at somewhere between 85% and 105% of estimated fair market value.

Can Any Auctioneer Sell Real Estate?

(POWER POINT SCREEN 11) Selling real estate by the auction method of marketing is a way to meet the needs of both sellers and buyers. It's another valuable service being offered by us at True Blue auctions. We would appreciate the opportunity to do what is right and in your best interests. We want to make your hope certain by Faith through Grace… To read more about Real Estate at Auction and to download your free worksheet click here.