Analyzing Sellers for Auction

ANALYZING SELLERS BEFORE THE CONTRACT

By: Mike Grigg, AARE

There are so many opportunities in the real estate auction business today, but we all must be careful to conduct auctions for sellers that are in the right mindset. Many listings are now taking six to twelve months to sell, and a lot of properties aren't even selling within this time frame. People are turning to auctions for the answer, but most sellers are not good auction candidates. As I have said before, if a seller's expectations are too high, pass on the deal! By taking on sellers that are not willing to let the well-advertised auction determine the true market value for their properties you are giving the entire auction industry a bad name, because on auction day the properties are not selling. How does this look to buyers and sellers when we can't sell a property either? They may think that auctions don't work. The last thing that fellow auctioneers should have to deal with is a seller that has had a bad auction experience and choose to bring their business to a realtor.

The simple way to avoid dealing with unreasonable sellers is to educate them about the market and auctions before jumping into a deal. The property is not what causes an unsuccessful auction, it is 100% the auctioneer dealing with an unreasonable seller. Remember, what happens on auction day is a report card on how well you screened the seller. We must make it clear to the sellers that we have no idea what the property will bring at auction, but neither do realtors. If you tell a seller that you can bring a certain price for their property and you don't reach that price, you will have a tough time convincing the seller that the auction price is what they should take.

Auctions bring future net value. This means that we cut out holding costs, many of us cut out commissions that the seller has to pay, and we virtually eliminate the property's value declining due to the current downward trend in the market. If these are valuable to the seller and they are ready to let the people with the money tell them what they are willing to pay for their property, then they are ready for an auction.

We must show sellers the benefits of selling at auction before we sign the contract. Make sure that you are signing the auction because the seller has to sell, not because you just want to have another auction on the books. We are only as good as our last auction, so make sure you get it SOLD!

Please visit the CSAA website at caauctioneers.org to list your auctions and obtain valuable information about our great industry.