WHAT IS AN AUCTION SITUATION?

Auctions are the fastest, most cost effective manner by which to bring real estate, equipment and personal property to the market place. To successfully merchandise by the auction method, you must have a property which two or more capable buyers would be ready and willing to buy at a fair price. The auction marketing method facilitates the private treaty sale process by adding significant marketing and a time element enticing all interested buyers to bid competitively auction day, therefore creating the highest market price possible.

Listed below are some typical auction situations:

1. Estate Liquidations or Partition

• Heirs or partners cannot agree on fair price.
• Heirs or partners want to dispose of property promptly.

2. Divorces

• Parties cannot agree on fair price.
• Parties want to cash out quickly.
• Parties offer their property to the entire market.

3. An Emerging Market

• Your property is so hot that it sizzles. Your phone is ringing off the hook from callers interest. Should you limit your potential return by applying a "price tag." "Highest and best use" is always the opinion of the buying side of the table.Will you leave money on the table by using conventional marketing on an unconventional "emerging market."

4. Creates Equal Access

• Public agency or fiduciary wants to ensure equal access to the buying public.

5. Appraisal value difficult to determine

• For example, scarcity cannot be factored into an appraisal. Appraisals are based on past sales when the supply and demand may be different.

6. OREO Properties

• Other Real Estate Owned (OREO) properties. Allows a quick sale for the financial institution that now holds the property.

7. Rapidly Changing Market

• If demand is high for a particular type of property the competitive environment of an auction prevents the seller from selling too low. If the supply is too great or the market is deflating, an auction allows the seller to "freeze" the market at an auction day price preventing further price erosion.

8. Property Location

• Project or property may be difficult to find. The auction method provides a concentrated marketing program which draws attention.

9. Financial Situations

• Seller needs quick cash.
• Seller wants to buy another piece of property but must liquidate present property to finance new purchase.
• Bankruptcy.

10. Retirement
11. Partnership Split-up

• Division of partner holdings.

12. Auction Minded

• Seller is auction minded and feels an auction will bring him a fair price in a minimum amount of time.

13. Demand Exceeds Supply

• Aggressive bidders help ensure sellers’ inventories will not be sold for less than the current value.

14. Supply Exceeds Demand

• Auctions bring together the supply of limited buyers for the available properties.

15. High Carrying Cost
16. Unique Property

• The more unique or specialized a property is, the more an auction can help obtain a high price because additional marketing is needed and determining an appraised value is difficult.

"If your situation is similar to one of those above, an auction offers a ready alternative. If you have checked up to three, an auction could be the preferred method of marketing. If you checked more than three, we should be planning your auction."