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Buying & Selling a Home

Selling Your Home on the Auction Block

When traditional sales techniques don't work, consider this alternative.


William Sheridan, of Sheridan Realty & Auction, in Mason, Mich., is president of the National Auctioneers Association.

KIPLINGER'S: Are auctions only for distress sales?

SHERIDAN: That's an unfair stereotype. People are beginning to use auctions for all classes of homes. Most are motivated sellers -- there's been a death or divorce, or they've bought another home or want to move to a different school district. There are also sellers who listed a property a long time ago and haven't had anything happen. They really want to get the property sold and move on.

What's the advantage to an auction? The timeline. You sign a contract, then there's a six-week marketing blitz during which we saturate the area with brochures, postcards and ads in local and regional newspapers. For a high-end trophy property, we might use radio and TV spots or advertise in the Wall Street Journal. After we conduct the auction, you close in 30 days. Another big advantage to the seller is that it's a cash transaction. There's no provision in the agreement for financing, inspections or anything like that. The buyer would arrange that prior to bidding.

Is it cheaper to sell your house by auction? No. Commissions are similar to commissions in the conventional real estate industry, although some auction companies will transfer commission costs from seller to buyer. The seller also pays marketing costs, which typically run about 2.1% of the sale price, or about $5,000 on a $250,000 house.

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Will I get the best price? An auction is the purest form of price discovery. But today the market in some areas has receded below the waterline. If you have an inflated idea of what your house should bring and you're not interested in accepting the market value -- determined by competitive bidders who are qualified to buy -- then you should list your house for sale the conventional way.

Must you sell at any price? Only if you've agreed to an "absolute" auction. Selling subject to reserve lets you set a minimum price.