Tip:
Highlight text to annotate it
X
Hello again, it's Gary Gilbert, Principal of Real Estate Auction Options. Every day
I get asked pretty much the same questions about the auction process. How does it work?
Let's answer those questions now.
Well, the person that would consider a luxury home auction is probably someone that has
had their property listed for an extended period of time. They may have had few, if
any offers. They probably had contingencies that probably fell through. So, the bottom
line is that someone would like to take control of the sales process. They like to be in control
by using a date-certain event instead of buyers being in control. That's typically going to
be the person that would like to use our services.
A candidate for a luxury real estate auction is pretty much consistent with what I see
every day. Typically they are not going to be a distressed seller. They don't have to
sell. There's not maybe a lot of debt on the property. Usually the reasons that they're
trying to sell this asset is that they're moving, they're downsizing, they may be doing
just some simple asset allocation or there may be some health issues and this one asset
is the one thing that is really keeping them from closing a
chapter of their life. So that's going to be the ideal candidate that we would see.
Well for some of the lower end properties maybe a bank auction, or something like that,
yes there are distressed situations there. But at the level we play at, the luxury level,
most of these properties are not distressed. Let's think about this. Let's think about
the Barrett Jackson car auction in Phoenix or let's think about an art auction or what
not. How do those people sell that asset? Typically they don't put an ad in the paper
or what not. Typically they do an auction. That auction creates urgency and excitement
and forces these affluent people to react. Therefore the lack of the stigma of distress.
There's really a couple of types of auction. There's auction with reserve, called a reserve
auction and then there's what is called an absolute auction which means selling to the
highest bidder regardless of price. Under the reserve umbrella we have what's called
a non-published reserve and then we have what's called a published reserve or a published
minimum reserve. And then of course the absolute auction which sells to the highest bidder
regardless of price.
For most firms it's going to be pretty standard. We're going to use in our industry what we
call a buyer's premium. A buyer's premium is simply an amount that the high bidder pays
in above and beyond their high bid price. It's a percentage. It's typically 8-10% which
varies by firm but for the most part the buyer's premium is used to fund the commission for
the listing broker and buying broker, if applicable. The remainder is how the real estate auction
company is paid. The seller's total commission is usually their funding the advertising and
marketing of the event upfront in advance and that is usually their total commission.
Well really, you could do like most people do. You could go out and do a search on the
web and find a handful of players that play at this level. You could give calls to them,
do research, they might come out to see you. It's a fairly lengthy interview process. Or
you could just contact someone like us at Real Estate Auction Options. We are familiar
with all of the firms, all of their business models, the pros and cons of each. We would
simply look at your situation and make a recommendation as to who we think the best luxury real estate
auction company suited for your needs may be.
You can learn more by calling me directly. My number is 404-784-5759. That's my direct
line. Or feel free to visit our website www.realestateauctionoptions.com