What’s the Difference Between Selling Your House at an Auction vs. Selling It on the Market?
Are you thinking about downsizing you home? Looking to move to another neighborhood? Or have you just outgrown your current home? Whatever the reason, the decision to sell your home is a big step forward, but there is one more decision to make before you “pull the trigger.” Should you sell your house at an auction or on the open market? As with all things in life, there are pros and cons to each side of this real estate selling coin.
What You Get With an Auction Sale For Your Home:
You Get a Short Window for the Sale
Whether you’re selling a rare painting or a home by auction, there is a sense of urgency generated around the sale. This is the only chance a buyer will get to bid on that property. If they miss this chance, they could be missing out on a deal of a lifetime. From the seller’s perspective, you get to set a date and time for the sale. Once the auction takes place, you’ll know in a very short amount of time what your home is selling for. For instance, the auction can start at 9:00, and you’ll have an answer by 9:15.
You Get Price Protection
The first thing you do when you consider selling your home is come up with a price. That number can be derived using many factors. At an auction, this becomes your reserve price. Your home won’t sell for anything less than that price, or it will be pulled from auction. On the flip side, the bidding can go a lot higher than the reserve price. That’s where things get very interesting for the seller.
You Get to Set the Terms
On many levels, selling a home at an auction is a lot like an “as is” sale. There won’t be any inspections or charge backs that can impact that final sale price. The buyer assumes those risks. There also won’t be the proverbial “cooling off” period where a buyer can back out of the deal. Setting the terms for your sale puts you in control of the situation.
What You Get With an Open Market Sale For Your Home:
You Get a Wider Pool of Potential Buyers
Auctions aren’t for everyone. Even the financial conditions of the sale might shrink your potential pool of auction buyers. Plus, that specific date could also be a hindrance if someone can’t make the auction. Then there is the intimidation factor for a buyer. It could be just too much angst to get into a bidding war. On the open market, you can cast a wide net among potential buyers. That’s because once your home is listed, there will be plenty of time for open houses and tours.
You Might Not Spend as Much Money to Market
Several brokers who are looking for their clients will pick up a home that is listed on the open market. If you have your own broker, they will be doing most of the marketing for you. That shouldn’t cost you any upfront money. Instead, they will earn that back through their commission.
Speaking of commission, you won’t be selling your home by auction commission free. Sometimes those commissions could be higher than with a real estate broker. It is something to negotiate with either type of sale before signing a contract.
What’s the Difference Between Selling Your House at an Auction vs. Selling It on the Market? – Final Thoughts
You might discover during this process that working both sales methods could be a benefit. If you don’t get any offers on the open market that are acceptable, you could set up that reserve price auction to make sure you get at least what you’re asking for. It might also help to attend an auction so you can see the process unfold for yourself. The more informed you are as a seller, the stronger the sale will become.
Anum Yoon is a personal finance blogger and writer. She created and maintains her personal finance blog Current on Currency. You can subscribe to her blog newsletter right here for her weekly updates.
