JDA Real Estate Roundtable Episode 20 | How Does The Auction Process Work?

Jason Wade

Selling Your Property at Auction!

Selling real estate has traditionally been a time-consuming process for both the seller and the buyer. Negotiating terms is a lengthy and often frustrating process. John Dixon & Associates (JDA) is proud to offer an exciting, efficient and, most importantly, effective alternative to our clients. The auction process, while not new, is fast becoming the method of choice for meeting the needs of both sellers and buyers. Our auctions accomplish this because they are based on three proven principles:

  • Auctions generate excitement. The bidding atmosphere is fun, competitive and stimulating.
  • Auctions are time limited, which gives the potential buyer greater incentive to act. They simply can’t wait.
  • The auction process is flexible enough to meet the unique needs of each client. We can structure the auction in a traditional or sealed-bid format, as an absolute or reserve auction, and provide services for clients with multiple properties in various locations.

Absolute Auction vs. Reserve Auction

These are the two basic approaches to selling your property at auction. At an absolute auction, the seller agrees to sell the property, regardless of the price. Conversely, prior to a reserve auction, the seller reserves the right to accept or reject the bid. These two options provide flexibility for both buyers and sellers and create differing environments. Because absolute auctions generate an atmosphere of now or never, it has been our experience that they produce larger crowds and create more active bidding, producing higher yields for the seller. If potential buyers are convinced that they will be the high bidders at auction, they will come to the auction having done their homework. A more educated buyer is always an advantage to the seller.

Auctions vs. Traditional Real Estate Transactions

The auction is a form of competition with inherent dynamics that cannot be duplicated by private real estate marketing. During the auction process, each bid reinforces the market value of the property which encourages continued bidding. In a traditional real estate sale, the buyer negotiates the seller down. In an auction, the buyer can win only if he outbids all other bidders. Additionally, a professionally-conducted auction eliminates potentially lengthy and costly sellout periods. It has often been demonstrated that a property that couldn’t sell at any price was sold for top dollar in minutes at auction. This happens for two reasons: (1) the proceedings at an auction are led by seasoned professionals, and (2) the property is effectively promoted and targeted to a multitude of interested buyers.

The Benefits of an Auction

When you decide to sell your property at a professionally-run auction, you have made a decision that benefits you as a buyer or a seller. A successful auction is no mystery or accident. It is well planned and carefully coordinated. From the initial inspection of the property by one of our highly-qualified associates to our in-house advertising, the professionals at John Dixon & Associates are committed to making sure that every auction works for everyone involved.

Knowing that the auction audience comes to buy, the seller’s benefits include:

  • A quick sale reducing long-term carrying costs, including taxes, maintenance, interest and lost opportunities
  • Auction marketing and bidding full of enthusiasm, commanding top dollar for property sold under the hammer
  • The assurance that property will be sold at market value
  • You set the terms
  • Required prequalification for prospective buyers
  • A predetermined sale date
  • No cumbersome back-and-forth negotiating
  • A holding cost of up to 25% per year can be eliminated
  • All cash closing in 30 days
  • No lengthy negotiations
  • The seller is motivated to sell immediately