You may have read about auctions as a unique way of selling certain homes in the Lake Minnetonka real estate market. Some creative home sellers have employed this option as an alternative to a traditional listing.
A Closer Look at Lake Minnetonka Real Estate Auctions
There are basically two different types of auctions: "with reserve" and "without reserve." An auction without reserve is also referred to as an absolute auction. An absolute auction is one in which the property seller has not established a reserve, or minimum price, and will accept and agree to the highest bid. A reserve auction implies there is a minimum price threshold that the seller has no obligation to accept. For example, on a home the seller feels should fetch, say, $500,000, he may refuse any and all bids less than the $500,000 reserve.
Auctioning real estate does, however, have certain challenges and an auction may not be the right fit for all properties. Three major factors must be examined before selecting an auction as the best method to sell a property: the home being offered for sale, the seller's situations and desire to sell in a non-traditional manner, and the condition of the real estate market.
- Unique Lake Minnetonka real estate that is difficult to appraise may be good prospects for an auction. Often large estates comprised of substantial acreage in addition to a huge house are candidates for auctions.
- The seller needs to be committed to the concept of an auction and be prepared to act swiftly to accept the highest bidder in the case of an absolute auction.
- The Lake Minnetonka real estate market should have a healthy demand for comparable homes even if the inventory is scarce. And when conditions exist that characterize the real estate market as a “seller’s market,” that’s usually a good sign that an auction may be a good idea. Many experts suggest that a home that hasn't sold after a substantial time on the market may be a prospective candidate for an auction.
When a home is scheduled for auction, sellers often enjoy higher prices fueled by competing bids between buyers who are both motivated to buy and bid with the serious intention of being prepared to act quickly.
On the downside, there are several potential pitfalls that sellers need to consider:
- The seller must pay for the cost to advertise the property in the Lake Minnetonka real estate market even if it isn't sold.
- In the case of a reserve auction, there are no guarantees that the auction will generate a price that meets the reserve.
- There is always a risk that the advertising and promotional activities won’t deliver a sufficient number of bidders.
From the buyer’s perspective, financing — if the purchase isn't a cash transaction — is required to be arranged beforehand. Typically, auctions do not accept bids that are contingent on financing.
Buyers may also experience some prospective problems in the auction process:
- Of course, they may be outbid and may lose their chance to purchase the property.
- They may incur the expense of property inspections or even appraisal estimates before the auction date, with no guarantee they will be the successful bidder.
- They may have to pay required or desired repairs of improvements if they are the winning bidder.
In summary, if you’re intrigued by the idea of auctioning your home for sale, it could possibly be something to consider. An auction could potentially reduce the time your property would be on the Lake Minnetonka real estate market. Experts recommend visiting other auctions to see how they are conducted. Consult a real estate agent and interview professional auctioneers. Armed with a little knowledge and preparation, you will be better equipped to determine if an auction is the best way to sell your home in the Lake Minnetonka real estate market.
Get more tips for selling a home in the Lake Minnetonka real estate market by finding us on Facebook and following us on Twitter.