By Katherine Tarbox, Senior Editor, REALTOR® Magazine
“If you start an auction at $50,000 for a property, it will not reach $280,000” said Bill Sheridan (AARE, CAI) chairman of NAR’s Auction Forum Committee at the 2009 Midyear Legislative Meetings & Trade Expo.
Auctions have become a popular way to quickly create buyer urgency and sell a home in a matter of six to eight minutes; however, most sellers are usually in distressed situations and need to collect a minimum dollar amount. Sellers can set reserves, but buyers tend to respond better to absolute auctions – properties that will sell no matter what the price is.
“I open the bidding at the price I think is the fair market value for the property,” said Sheridan. This anchors the price for buyers and usually the selling price ends up there, in Sheridan’s experience. When bidders are slow to respond, he will break the auction to give more details to inspire more buyers. Sheridan also recommends that auctioneers slow down their chant, and not used the brisk pace he once used as a cattle auctioneer.