Online and in-person luxury property auctions are two very different experiences. One is in no way of lesser value than the other, but one may suit your needs better than the other. The reality is that if you buy or sell a house at a luxury real estate auction in person or online, you’re more likely to find a hidden gem regardless of how you find it.
There are several ways that sellers benefit from selling their luxury property at auction in person and online. Especially during the pandemic, sellers had no other choice than to put up their properties on the internet for auction, and it worked. In this article, we’ll go over the advantages and disadvantages of both options. Let’s look at all the ins and outs below:
PROS OF LIVE AUCTIONS
TERMS AND CONDITIONS
As the seller, you’re able to set the terms and conditions that you want so that potential buyers will have to agree to them if they want to bid on the property. This translates to the fact that you know the sale with go through as you expect it to minus the spontaneous mistakes or issues that could appear.
BUYING AS-IS
Another advantage of in-person auctions is that in a luxury real estate auction setting, every prospective buyer knows they’re coming in with the intention to buy as-is. There is no great expectation to have repairs done and perfection manifested in a property. As the seller, you don’t have to worry about that. You can also get the asking price you want because bidders can’t really determine the value of comparable homes and will take your price at face value.
RESERVE PRICE
The seller and auctioneer work together to set the reserve price with an appraiser or realtor that will assess the value of the home. The reserve price is the base amount the seller is willing to accept so that they can sell the home and walk away with something in their pockets.
EARLY SALE POTENTIAL
Selling the property before the auction day even starts is a great option to consider. An early sale is a potential event when a prospective buyer is resolute on your property and wants to make an offer before the auction because they either want to avoid the competition or just want to prove their interest.
BIDDING WAR
While it sounds negative, what sellers really want over their property is a bidding war. Yes, you want people fighting over your property and offering more money due to fear of walking away with nothing. As the value is communicated, the sale will be higher and bidders will push up each other’s offers. That equates to more in your bank account.
There are advantages for sellers in real-life auction settings, but there are also some negatives that you may want to consider before going forward with your mansion auction.
CONS OF LIVE AUCTIONS
CHANGING DATES
Your property may be advertised as for sale on a specific pre-planned auction date but once the date arrives, it’s possible that you won’t be able to sell anymore due to a raincheck. Potential buyers may be dismayed by this change in date and sellers could grow impatient as the auction house has too much inventory to pay particular attention to one luxury home.
NO GUARANTEE SALE
There is no such thing as a guaranteed sale. If bidding doesn’t occur right away when the luxury home is brought to the bidder’s attention, you may be witnessing a standstill that makes potential buyers become skeptical of the value of your property.
COMPETITION
Buyers don’t love competition and for good reason. Especially at a live auction where everything seems urgent and necessary right now, it can be tricky. Buyers want to have their homes inspected and to take the time to consider if they will purchase or not, whereas a luxury property auction is on the spot and immediate. Your pool of potential buyers may shrink at the nature of the sale.
SELLING RIGHTS
If you are selling your property through an auction house, take heed that the company may own your sole selling rights on the property for a limited amount of time. So essentially, if your home stays stuck on the auction block, you can’t connect to another vendor or real estate agent to assume the sale.
Online auctions are changing the way we sell real estate, the way auctioneers run auctions, and buyers buy at them. Bidders can now join in on an auction from anywhere in the world, as long as they have a stable internet connection.
PROS OF ONLINE AUCTIONS
Convenience
Bidders don’t need to be in one place at any given time. Especially given the nature of luxury property buyers’ lifestyles, they are most likely traveling, busy, or can’t attend in person for some work or personal reason. Auctioneers aren’t needed either to run the auction, so that takes away the need to interface with multiple people.
Rich Information
With all the information you need on each luxury property concentrated in one space–typically the website features a catalog–you can focus your attention on that one website and study it. All the external documents you need to buy or sell will also be found on the website of the auction house. Several auction companies incorporate media and visual images to showcase the property–which is great for someone who wants to savor the photos.
Time Saving and Money Saving
Online auction is a great time saver and money saver for buyers and sellers. Buyers can stay from the comfort of their own homes to participate in an auction halfway around the world. Sellers don’t need to attend or even set up a live event–everything is taken care of virtually.
Compare Prices
When bidding online, buyers have the opportunity to compare prices as they are in real-time. Bidders can do small research regarding property prices and values with another online auction site before they actually place a bid.
CONS OF ONLINE AUCTIONS
Prolonged Time
A live auction has one single day of bidding, but a timed online auction takes a few days. This means there is a delay in time as the auction ends bidding at a later date. Bidders can place bids in at the last minute and cause the auction time to extend. This defense combats sniping.
Anonymous Bidder
Online auctions aren’t live, so you can’t meet people in real life and get a sense of who they are and what their intent is. Anonymous bidders can come in and never reveal their identity. Auctioneers have no hold on who participates in bidding, thus breeding secrecy among bidders.
For more information on online and live auctions and if you’re considering companies to auction luxury homes, please contact Platinum Luxury Auctions today!
