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The 10 questions I have been asked most often as an auctioneer and my ten best answers.  

Auction = The Social Construction of Value

Price Discovery:
Value is determined by a group via consensus rather than arbitrarily by an individual.

What do a:
yearling colt sired by a triple crown winner;  a rare 17th century map;  an abandoned 1978 Cadillac; a freshly caught 100 lb yellow tail tuna; a Florida condominium; a prize Jersey cow; a billion dollars of Govt. Bonds; the paperback rights to the latest best selling novel; 100 shares of Google; a sketch on a bar napkin signed by Picasso; two hundred slightly damaged digital watches; a pair of Imelda Marcos’s shoes and the Pontiac Michigan Silverdome have in common?

They all sold at auction.

What does auction tells us? That values are always changing.

#1: If I sell at auction, aren’t I just giving it away?
Answer: NO, not at all. While some people think of auction as a bargain, or a distressed situation, Auctioneers understand this psychology and use it to the seller’s advantage.

While there certainly are many good buying opportunities at an auction, the best articles in the world are sold at auction. How do you put a price on some things? Only at auction.

Through auction, the seller is in control. The seller controls the timing, the extent of the marketing, the terms of the sale and all but guarantees a marketplace (by creating one if necessary). During the times of a very strong real estate market, you may have heard of situations where a property was sold at above the original asking price. That is in essence an auction except that the home shoppers who found the listed property at the same time were making offers blindly, not knowing what the other offeres were. What price could be achieved if they were bidding head to head?

Please refer to the section of this website, Auction Types & Formats, for more information.

#2: Why would I sell my property at auction?
Answer: The answer is easier than you think. Of course, getting the most money is important to both you & your auctioneer. But you can't sell a property through a traditional listing and the auction process at the same time, so you need to look at other information to help make the choice.

Information such as "is the property currently being gainfully used by you at this time?" If it is, you may want to get a certain price or otherwise remain in the property. If not, then every day the property remains unsold is a net cost against your bottom line. Costs such as heat, utilities, taxes, insurance, maintenance, security, depreciation, and loss of return on the money invested otherwise are ongoing and mean that the longer it takes to sell, the less you ultimately put in your pocket.

Another reason that you may choose auction is that you are selling the property for an estate, a family member or a friend, and you do not live close to the property . You are concerned about having the property on the market for an indefinite period of time while it sits vacant. An auction will give you firm control of the time line and ensure you are able to sell it and move on. In these situations the risk of listing the property is higher than the risk of auction because you give up more via listing, especially over time.

#3: Will I get a good price?
Answer: The truth is that whether you offer your property at auction or by traditional real estate listing, the buyer is the one who is spending the money and therefore controls the price. In both cases you have the right to refuse any offer, but you can't spend the buyers money for them. The decision to auction or not to auction should depend on criteria other than price.

#4: What is more important than getting the most money?
Answer: First, there is Time.  Very often it is the money you fail to lose rather than the money you make that is the difference. The longer a property sits, the more it costs, the more is lost.  Meanwhile, that capital tied up in the asset is not at work for you elsewhere.

Secondly, there are contingencies.  An auction contract is a non-contingent sale and therefore has a greater certainty of closing.  As property is sold as is, where is, with all faults.  There less need to invest in a property to make it marketable and there no surprises or demands at settlement.

In any real estate transaction, Time is of the Essence.  In a falling market, time on the market can be a serious value issue. In a rising market, it can equate to money left on the table.

#5: What advantage does auction have over listing?
Answer: The advantages are different for different sellers, but generally think of it this way.
There are 3 elements of a real estate sale.
1. The price you get. 2. The time it takes to sell it. 3. The terms of the sale.
In a traditional listing you control NONE of these.

You can't predict how long it will take to sell or what conditions will be in the offer. You feel like you control price, but you really only control the right to say no and then keep the property. The buyer always decides the price. You merely accept or reject it.

In an auction, you control both the time and terms because you set them. And the price is controlled to the same extent seen in the traditional listing with the sellers ability to say no and refuse to sell. 

The fundamental difference with auction is that you are going to employ an aggressive marketing campaign to generate the highest degree of interest and use the competition and the professional skills of the master auctioneer to drive the offer to its highest level.

The primary advantage of the auction is control.

#8: How often do properties sell below appraised value?
Answer:  This is a difficult question to answer because it suggests that listed properties typically bring their appraised price, which is just not true.

This Auctioneer has a good deal of training and experience in appraisal of both real estate and personal property. Appraisal methodoloy, while a helpful tool in the decision making process is at best an imperfect science.  It only represents the past. Not the present or future and is represented in past dollar values.

#9: What other services do you provide?
Answer:  The short answer is, “What do you need?” Service is what sets our company apart from the typical realtor.  We specialize in high needs clients,  those in transitions and their agents; executors, beneficiaries, trustees, etc. Aside from auction and personal property appraisal services, we are prepared to supply or oversee any other related services that our clients may need.  It has been said that one cannot be all things to all people, but we strive to exceed your expectations of service.

#10: When is an auction not the recommended method?
Answer:  I am passionate about the auction process, but there are circumstances where it may not be the best path for a client. We do not recommend an auction if you are only 'Testing the Market', or when you are very satisfied with your home, and you want to sell it only if a certain price is met. In the meantime you have to live somewhere, so the carrying costs are a non-issue.  A good exception would be a high equity property in an exceptionally strong market is an excellent auction candidate.

In the end, the market sets the value.

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