With unprecedented market volatility across all real estate sectors, handling assets can be difficult. Sellers are looking for ways to maximize their sales prices, and investors want to capitalize on opportunities. Auctions are thriving in this crossover. With traditional home auctions being a different market, buyer demographic, and process overall, luxury property auctions are perfect for selling luxury homes. In this article, we’ll go over the key differences between both types of auctions.
The Key Differences Between Choosing to Auction and Going With a Home Auction
Deciding between the two different auctions really is based on whether the property being sold is a good fit for an auction in general. To decide whether or not to auction an asset, sellers can address third parties and auction specialists to determine how long the process will take, how it will all transpire, and how soon the seller wants to sell.
The assets that do best in auctions are usually multifamily, hotels, and offices. These types of properties drive the highest interest among buyers and bring the most opportunities. Distressed assets are also a large factor in auctions, but people involved in luxury real estate auctions understand that distressed homes don’t take up much of the market.
The process of auctioning property can happen immediately and end soon. The moment the seller agrees to sell through auction, the buyer could have the property handed over to him or her in 100 days or less. The traditional process of buying with agents or even with traditional home auctions is significantly longer due to personal preferences and contract negotiations.
Streamlined Buying Process
Traditional sales and traditional home auctions have a lot of steps involved in the selling process. With closing in luxury home auctions, the dynamics of the process are handled upfront. Auctioning luxury properties involves an initial agreement with an asset manager who assesses the property’s title, obtains all the due diligence reports, and aligns the escrow arrangements for closing. It’s faster because it’s taken care of way before the keys are handed over.
Some traditional home auctions take much longer. Luxury home auctions are great because when you opt to sell through one, you’re hooked up with a representative who will take care of the marketing and vetting for you, reaching out to potential buyers, creating an asset page online with the property’s relevant information and promotional material, and this is all done within two weeks. Sellers can pick a price to sell at which they’re comfortable, and then the team starts getting to work and fielding buyer interest. With traditional home auctions, this process takes much longer works with a less concentrated buyer pool. Buyers are more skeptical, may not have the funds, and are more likely to back out from purchases if they can’t afford the price.
Marketing and Sales are Easier
One advantage to selling at auction over traditional home auction is that auctions typically help you with marketing and sales outreach. They help relay inquiries and field interests. They’ll also help address concerns with the age of a property’s roof or market conditions that could potentially hinder the deal.
If buyers are serious about buying luxury property, they’ll sign agreements right away, bid that day of the auction, and make a nonrefundable deposit within a 24-hour window of their final bid if they win. It shows interest and seriousness about purchasing the property, which gives the seller the confidence that they’ll receive their money almost immediately.
The effect of sellers knowing who is serious and who isn’t is beneficial. The 45-day marketing period leading up to marketing day helps the seller have a good idea of what’s to come. A successful auction is typically one that pre-qualifies potential buyers. Buyers usually need to provide information about themselves before they buy and when they register for the auction, but brokers can streamline this process by conducting outreach on their own accord. With traditional home auctions, this process is similar except for the fact that buyers may be more skeptical to provide their information up front and have a harder time committing to an auction date as they’re also probably looking for homes through other means.
The marketing and outreach that happens way before luxury auction day helps facilitate a more efficient transaction before bids go live.
High Bidder Engagement
A benefit of luxury home auctions is high bidder engagement, which is critical in reaching a price that both the buyer and seller can be satisfied with. An auction also empowers the buyer to purchase the property. The whole process of selling levels out the playing field and works like a democracy, traditional sales emphasize the relationship with the brokers whereas auctions are serious about buyers having the cash to back up their intent to purchase.
Traditional home auctions have more time in the negotiation process and buyers may not be so excited about the purchase price. With luxury buyers, their intent is high and investors are also buyers so they’re more likely to come back for more purchases. Auctions cut straight through to the interested parties and the buyers who are most keen to purchase. The highest bidder wins. It’s a simple process.
Are you in the market to sell your luxury home and interested in doing it with the best method out there–through auction? If so, Platinum Luxury Auctions is here to help. Contact us today to discuss your options and speak with a qualified representative. We look forward to speaking with you and working together to sell your luxury home.