Top Reasons to Sell a Property Using the Auction Method

Why the Auction Method is Something to Consider

If you’re interested in selling a property “as is, where is,” the auction method is typically the way to go. Instead of marketing a property with a set listing price in a negotiated sale, some sellers opt for the time-sensitive format for a variety of reasons.

Auction sales can work in the seller’s favor by giving him or her more control over the process. After all, the seller gets to set the terms and conditions of an auction sale. Selling a property at a true market value is arguably most feasible using the auction method, and a property can sometimes end up selling at a higher price in an auction than in a negotiated sale. Three of the biggest auction format upsides have to do with timing, exposure, and financing.

Top 3 Reasons to Try the Auction Format Instead of a Negotiated Sale

  1. The auction method speeds up the process. Because an auction is a time-sensitive sale with a set date, this format creates a sense of urgency among potential buyers. Compared to negotiated sales, auctions stimulate a need for informed buyers to act fast, encouraging competition. It may be assuring to the seller, who knows exactly when the property will sell. In negotiated sales, the seller has no idea when the sale date will arrive – it could be any number of weeks or months after the property is listed. The accelerated timeframe in the auction method means the seller enjoys a 30-45 day unconditional all cash closing. To top it off, all due diligence, inspections, and testing is performed prior to the sale.
  2. The auction method increases exposure. Using the auction format ensures an aggressive marketing program, which is accelerated due to the limited timeline leading up to an auction. This accelerated marketing strategy can leverage the seller’s advertising investment 10-20 times in a multi-property event. Since auctions involve a large number of pre-qualified prospects, this aggressive exposure in an auction marketing campaign means the property is advertised to people who are truly serious potential buyers.
  3. The auction method cuts costs and may increase value. The speedy process involved in the auction method reduces carrying costs, which include taxes and maintenance. Auctions also require potential buyers to pre-qualify for financing, meaning the sell-side agent does not have to waste time (and money) dealing with those who are not “true” potential buyers. Compared to negotiated sales where the asking price is essentially the highest amount the seller will be able to get for the property, the sky’s the limit for properties sold through the auction method.

Over all, auctions are worth considering, especially if the seller wants an accelerated timeframe, increased exposure to qualified prospects, and certain financial upsides that the auction method can provide.

SVN Auction Services is a provider of date-specific sales and special asset solutions. It encompasses an elite group of local and regional auction Advisors throughout the United States who specialize in areas such as foreclosures, tax sales, multi-properties, receiverships and bankruptcies. SVN Auction Services offers the industry’s most comprehensive spectrum of auction solutions—from rapid asset resolution and 30-day countdown asset sales to wide area and high impact/high promotion events. As part of one of the most recognized and reputable commercial real estate firms in the industry, SVN Auction Services is supported by SVN International, which features more than 190 locations serving more than 500 markets. For more information, visit SVN Auction Services.

This blog post was adapted from the SVN | Menish Auctions website

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5 for Friday with Bill Menish of SVN Auction Services

This week, our 5 for Friday features Bill Menish, CAI, AARE, BAS, Senior Advisor/Real Estate Auctioneer with SVN Auction Services out of Louisville, Kentucky.

1. What is your geographic market and product specialty?
Through SVN Auction Services, we are capable of conducting auctions coast to coast, but our office focuses on the five-state region of Michigan, Indiana, Ohio, Kentucky and Tennessee. Our specialty is auctions but we execute them in many ways. In fact, we are about to roll out the brand new SVN Auction Services proprietary online bidding platform for timed and simulcast auctions. We also offer live onsite auctions, ballroom multi-property auctions and sealed bid auctions for all property types.

2. What’s your latest best practice tip that you can share?
“Use the media to your full advantage. Don’t worry, they realize they are being used.” I can say that with confidence having been a broadcast journalist in 4 states over a 20 year period with my final stop in San Diego where I was the morning anchor of the top rated morning news cast for 7 years. The walls of our SVN office are covered with framed newspaper articles and we have plenty of newscast footage saved that shows our success at inspiring the media to cover our auctions. They will cover your listings too “IF” you can find the story that their viewers and readers want to hear or see. You can load every listing platform ad buy every ad you can afford, but that free media is what is really going to help you get the word our about your property and why they should buy it. Every property has a story to tell, you just have to find it.

3. What’s been the biggest change over on how you run your business in the past decade?
In a word, it is Technology. It is not a bad word. In fact, we embrace the technological changes the industry is seeing. I heard someone the other day say that nothing has changed in the way we sell real estate or conduct real estate auctions since the economic downturn. I don’t think that could be further from the truth. So much has changed! How we get the listing, how we promote the listings and the sale, how we close them and especially how we turn that success into the next success has absolutely changed. I do believe that face-to-face time is invaluable, but with the clock moving faster than ever before, clients don’t feel they have the time, so you have to be able to connect and inspire even when you are not face to face, and often, that is through the proper use of technology.

4. What business book do you like to recommend to your colleagues?
I don’t have a business book recommendation, but rather just one word: Auctions! SVN Advisors don’t realize the powerful tool that could be in their toolbox, that if used, would deliver more checks and create extremely satisfied customers. We know why they are not using it. It is that darn word AUCTION. People have a pre-conceived notion of what it means and most of the time, they have the wrong pre-conceived notion. We are selling a c-store / gas station now with a 60 day listing that transitions into an absolute auction after the listing period. That is what this seller needed and we created a solution set that fit their needs. They can test the traditional waters, and if we cannot produce the buyer, the absolute auction will absolutely produce the buyer. Auction clients are easy to spot if you listen to them. Every seller wants top dollar, but auction clients have a need to sell in a time defined manner, or they need the kind of exposure that auction marketing produces or  they have a product that will glimmer in the spotlight of national exposure with an event surrounding their sale. I promise that you have talked to a client who would have considered an auction. Maybe you just didn’t hear them asking for it, but hopefully you will now. I promise it will help you sell more properties and close more deals.

5. What’s a fun fact that not everyone knows about you?
I have run 5 marathons and my wife has run 6. If someone ever claims I cheated, it would mean that I ran a marathon without her knowing so I could catch up with her. On a serious note, I am very proud of my accomplishments in my former career where I awarded 15 Emmy’s and the prestigious Edward R. Murrow Award. I tell people often that I was training to be an Auctioneer the whole time I was a newscaster, I just didn’t know it. The broadcasting business helped me hone skills that I use every day to succeed in commercial real estate.

*All Sperry Van Ness offices are independently owned and operated.

5 for Friday with Bill Menish of SVN/Ward Commercial Group

This week, our 5 for Friday features Bill Menish, CAI, AARE , senior advisor with SVN/Ward Commercial Group in Louisville, KY.

Bill Menish, CAI, AARE, BAS, Owner/Auctioneer, Erler Menish Auctions
Bill Menish, CAI, AARE, BAS, Owner/Auctioneer, Erler Menish Auctions

1.   What is your geographic market and product specialty? 
My geographic market is Kentucky, Ohio, Indiana and Southern California.  My specialty is Auction.

2.  What’s your latest best practice tip that you can share? 
My latest best practice tip is that when cold calling on bank clients to help them sell their OREO, if you can offer something new, innovative, creative with a track record for success, they will talk to you.  I’ve also found that inviting them to a lunch presentation works well because it helps them drop their guard and really listen to what you are pitching.

3.  What’s been the biggest change over on how you run your business in the past decade? 
My biggest change has been moving from selling non-distressed properties for sellers to selling distressed properties for banks.

4.   What business book do you like to recommend to your colleagues?  
The Success Principles by Jack Canfiel

5.    What’s a fun fact that not everyone knows about you? 
That I am an actor and a singer and I was Harold Hill in The Music Man.

*All Sperry Van Ness offices are independently owned and operated.