One of the biggest keys to success with potential buyers in a buyers’ market is the perception that they are “getting a deal”. Using an auction, whether going through an auction house or conducting a silent, private, auction on your own is a great way to give potential homebuyers the perception of a great deal!
NOTE: Be sure to check with an attorney in your area to make sure that you have all of your legal requirement in place to protect yourself when you’re selling through a home auction.
If you were to poll a group of motivated homebuyers and ask them; what is the most important thing they are looking for in a purchase, you would think maybe it would be the number of bedrooms, square footage or location, when the reality is they just want to know they are getting a deal. Sure, the other criteria is “part” of the equation, but the “deal” is the clincher!
Why? Because the media and all their friends are telling them they are supposed to get a good deal.
And what better way to get a deal then buying a house at auction?
Nothing says deal more than the word auction. Especially home auction because a buyer’s natural thought is a foreclosure auction. And what do people think of when they think of the word foreclosure? A deal!
In this article, we’re not talking about a home auction like you’re probably used to seeing with the auctioneer at the podium going for the highest bid and coming up with a huge chunk of cash that afternoon.
We’re using the auction method to help create a buying frenzy, to generate offers, and to create a legitimate buyers list.
To do this properly, you’ll want to do 5 things:
- Create an urgency to attend an “open house” event
- Invite interested parties to attend a preview event the night before
- Give potential buyers the rules and requirements upon entering the home
- Have interested parties submit their offers onsite at the home auction
- Follow up with EVERYBODY the day following the house auction
So what’s the absolute, most critical element for a successful auction? You must create a sense of urgency! This sense of urgency lets the buyer know they need to take action and take action now or the deal will go to someone else. Urgency is critical.
Also essential, is adequate exposure. You’ll need to create as much buzz as possible for your auction.
There’s nothing better than a room full of buyers seeing each other and knowing that one of them is very likely going to be bidding on the property against them, which almost turns it into a competition or game.
Nobody wants to LOSE to someone else!
This is why eBay is so successful. It’s not because people actually WANT to pay $40 for a trinket they can get at Goodwill for $4. It’s the fear of loss. It’s the fear that someone else is going to get it – and not them.
The same holds true with your auction.
So, how do you get this exposure?
You’ll want to invest in an ad in your local paper if you’re serious about Selling through a home auction. I’m not a huge fan of certain print advertising in the real estate market, simply because of lukewarm results, but with an auction, it’s vital and will get a worthwhile response.
Also, bandit signs are another great way to get traffic. Put signs out weeks ahead of time with a very clear date and time of when they can see the property and make their bid.
You’ll want to drive traffic for a few weeks giving yourself enough time to generate a buzz and hold your auction over a weekend with a definite completion time.
Also remember, this is a silent auction, so people will not know what bids have been made. This obviously is important because it will help drive the price up.
Of course, you’ll need to know your state’s particular auction laws to make sure you’re in compliance.
You’ll also want to make sure you have all the “legal” terms spelled out to cover yourself in case you don’t get an acceptable bid.
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