Can An Online Real Estate Auction Surpass My Asking Price?
Is a “with reserve” real estate auction or an “absolute” real estate auction best for me?
Selling real estate via live auction has been popular for many years – and with technology continuing to advance, selling property via online auction has gained popularity rapidly and does not seem to be slowing down. If you have never sold any property via online auction, you might have a lot of questions regarding how the process works and how much your property will go for, the risks involved and how involved you must be in the process. To read more about how the entire process works from beginning to end, check out our blog, “How To Sell Your Building In A Commercial Property Auction”
One question that is often asked when an individual is considering selling their home on an online auction is whether the bidders can surpass the asking price of the seller. The answer in short is ABSOLUTELY! This is what the auction process is all about – the best value for any item being sold, including real estate.
When talking about online real estate auctions, there are generally two types, “with reserve” which as stated above, means that the seller will require a certain amount for the property to be sold or “absolute” meaning that the property will require no minimum bid and will sell no matter what the highest bid ends at. The reserve price is not considered an “asking price” although the two can overlap in some aspects, and it might be hard to differentiate – you should also be aware that a reserve price is going to be different than the “starting price” which, obviously stated in the name is the price that the auction will start at. This price will most likely be more around the realm of what the seller hopes to get out of the auction. If you have made the decision to sell your commercial or residential property on an online auction, you’ll be faced with the decision of which type is best for you to sell your property on, with reserve? Or on an absolute real estate auction? There are pros and cons to both absolute auctions as well as with reserve auctions, and either one could be right for you depending on your specific situation. For example, If you have been sitting on a piece of property for awhile or if there isn’t a lot of attraction because of the state of the home or property you might be willing to sell via absolute auction.
Selling your property “absolute” can be more stressful but many times will result in more bidders and higher prices for your property! Absolute auctions are also going to require less involvement on the part of the seller, yet might require some compromise in the final price of your property. It’s extremely unlikely that after the time for bidding has ended that it would not be sold which is great, although the final price might be different than what you expected. When it comes to selling your property with a reserve, the pros and cons look a little bit different. When a property is sold with a reserve, the property does not sell beneath the sellers reserve amount, if the auction finishes and does not meet the reserve, the seller can do what they want with it. If you are looking to sell some property but will not accept an offer less than “x” amount, then selling with reserve is probably more up the alley for you. You will get to decide what the lowest amount is that you are willing to accept for your property which also might weed out any bidders who are not serious about purchasing the property for its actual value. Selling a property via reserve auction might require more involvement on the part of the seller, this includes of course deciding your reserve price, as well as possibly lowering the reserve based on bidder activity and other auction details. The downside to choosing the with reserve type of auction is that you might not have any bidders that are willing to pay that reserve amount. If this is the case you could lower your reserve, decide to either accept a bid that might be below the reserve amount, or you could choose to not sell your property at all.
Ultimately, the choice is yours as to whether you sell your property with reserve or absolute based on your specific needs for the property and how much you are willing to accept for the price on the prices that you hope to receive as well as what is realistic for what the property is worth.
If you want help getting your piece of commercial or residential real estate property listed for auction, contact our customer service team today. We are happy to get you started with the process!