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Auctioning House vs Selling Thru Realtor?

Posted by suzieque (My Page) on
Sat, Jan 5, 08 at 7:59

Hi all -

We're selling the house I grew up in. Mom is now living in a retirement community, Dad is deceased, my only sibling lives out of the country.

The house is about 140 years old, in decent shape but needs work (mostely cosmetically. Structurally great, typical house that older people have lived in for 50 years). It's over 1/2 acre of land in a nice community.

We're auctioning most of the furniture, etc., and the auctioneer has suggested auctioning the house. There is no requirement that we accept any bid (can refuse the highest bid if it's not acceptable). From what I'm thinking, we can put the house on the market and it might sell or it might sit for ages in this market, or we can auction it and potentially sell it that day.

The realtor would charge 4% commission. The auctioneer typically has a 10% premium, but told me he usually gives 1/2 to the seller.

What do any of you think of this? Have you had experience with it? We're in Massachusetts, by the way, if that helps to know how the market is (bad).

Suzieque


Follow-Up Postings:

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RE: Auctioning House vs Selling Thru Realtor?

In my area, a 140 year old house usually is very desirable. There are a pool of buyers that love these types of homes. Its not your typical raised ranch, or bi level and they arent all over the place. If it were me (and I am an agent) I would talk to a local realtor to hear their thoughts on the days on market for this type of home in your area and its projected "selling price". Then try to auction it off (if you want a quick sale). You'll have a good idea if the auctioned price is close to market value and if you have the option to turn down the auction price, you have nothing to lose (check that there is no fee to do this). My experience with auctions, however, is that most people bidding at auctions for homes are looking for steals and deals, not the person looking for a nitch house such as your moms. If you do choose to auction, I would also make sure it gets advertised well (this type of home needs to go in an antique homes magazine) and has a sign on it stating the auction date and time for a few weeks before the auction to attract those that generally wouldnt buy a house at auction but would be interested in this home.


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RE: Auctioning House vs Selling Thru Realtor?

Why would anyone bid at auction if the owner can turn around and not accept the highest offer?

I can understand having a pre-set minimum, but beyond that, the seller should have to complete the sale.

And would you have to pay the auction house its commission if the sale doesn't go through?


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RE: Auctioning House vs Selling Thru Realtor?

Auctions reek of desperation and you are very unlikely to attract top dollar.


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RE: Auctioning House vs Selling Thru Realtor?

Doesn't it all depend on the home and the market? I think you need to do some research to come up with a price. What does a REA think it COULD go for, and then what it WILL go for reliably, minus REA fees, time on market etc.
Then look at Auctioneers fees, how much does getting out from under it mean to you versus money made and make the decision. Keep in mind you will have to keep insurance on it, winterize it etc. if you don't auction it - but make sure you don't give it away at auction either. Linda has some good ideas re marketing either way you go.
Graywings, I don't see why they shouldn't be able to have a "reserve" price at auction - they do it on ebay. If there is a bidding war so much the better.


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RE: Auctioning House vs Selling Thru Realtor?

It's done commonly here and quite often to settle estates. You are just as likely to see a house tied up in probate at auction as through a realtor.......in fact, more likely. Why? The time element. Nobody wants to perpetuate the probate process any longer than it already is, especially if there are multiple heirs. So, eyebrows are not raised when they go in estate auctions. You sometimes get people who are semi-interested and there for the fun of it, who end up getting caught up in the bidding and buying it. LOL.

Many homes in estate sales are also not up to date cosmetically, because face it, the occupants are usually elderly and feel good to even keep it up structurally. Auctions here sell these homes "as is" for the most part and the parties interested in bidding come with proof of funding and their ducks in a row.

Getting serious, isn't every prospective home buyer looking for a deal? Estate auctions can be a good hunting ground. Typically the homes are older and often well made, but there are updating issues and sometimes code issues. You likely will not have a chance to have home inspections done.....but some auctioneer/realtors will take you through the house for showings or have open houses so the public can get a better look at the property.

Yes, of course you can set a minimum sales price. You prolly have already had it appraised for estate purposes. And I really, really would rather have an independant appraiser give me their input than a selling agent. The appraiser is going to get paid a flat fee with no numbers influenced by possible commissions. If you have a good appraiser, and you get out of the home what it was appraised at, then you can usually walk away from the sale feeling confident you at least got a fair price and the buyer a fair deal. The thing is, your prospects are all standing there bidding, and essentially a captive audience.
There are no games and no waiting and no counter offers. It's surgically clean.


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RE: Auctioning House vs Selling Thru Realtor?

Thank you all! I really appreciate your input and the time you took to respond.

The bit about not having to accept the highest bid surprised me, too. But that's what he said. Good question about whether we have to pay the auctioneer even if we don't accept a bid. I'll bet we do. I'll ask.

I've had 2 REAs see the house and they came in at almost identical starting prices to list at (within $900 of each other). They each said to plan to accept $15-20K less. Well, I'd much rather price it to sell. I agree about having to continue to pay bills on it (RE taxes, minor utilities, etc.) rather than just get it sold.

Would probate would enter into a sale? My mom is still alive. I thought probate only came in after death.

Again, thank you all!

Suzieque


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RE: Auctioning House vs Selling Thru Realtor?

Oh my no,Suzieque, probate has nothing to do with your property. I misread your post, obviously, and missed that whole part about your mother going into a retirement home. I'm sorry and I'm also glad she is OK.


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RE: Auctioning House vs Selling Thru Realtor?

"Estate auctions can be a good hunting ground."

I have purchased a number of places this way (both auctioned and directly from estates).

Neither gets top dollar.

If you are just looking for a way to get rid of a property and make some money that is what you will get.

These are at the very fringe of 'willing seller, willing buyer' purchases since in many cases there is at least some pressure to get probate over with.

If you can do the required fix up work just about every estate house requires it is a good way to make some money.

I started out doing renovations & repairs this way.
Purchase an estate house, move in and make upgrades and repairs, then sell for a rather decent profit.


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RE: Auctioning House vs Selling Thru Realtor?

We seem to be at the opposite sides of the spectrum looking at the same situations, Brickeye but I do respect your experience. I've had a bit myself. I have been more more than a few auctions where the properties have gone for much more than what they would have been worth on the market. And some much less. I do agree with you that a house seldom needs to be sold "raw" and even a month's worth of cleaning, painting and yardwork can dramatically increase your profit.


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RE: Auctioning House vs Selling Thru Realtor?

I don't have experience but have done some looking and have run into a minimum dollar set by either a bank or the courts or someone that IMO have been pretty high, hardly a deal, more like the max it could possibly get on the market, and if they don't sell that's where they go, often to sit for quite awhile.


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