I am a broker and a real estate auctioneer in Denver. We educate and partner with area agents and brokers to assist them with clients who are candidates for the auction way of selling.
NAR says that auction is the fastest growing segment in real estate. Yet even though individual auctions – especially for luxury homes and land – are really gaining traction in this area, we find that many agents have resistance to the idea of selling property at auction.
I realize auction is not the answer to every situation, yet we have had great success selling certain properties this way. I would love to get some feedback regarding your views about selling property at auction, including any experiences you may have had (positive or negative).
Your feedback would be valuable to me in reaching out to agents, and also ultimately in educating them to help expedite the sale of certain inventory that may be sitting on the market longer than it needs to.
What do you think? Have you ever considered advising a client that auction might be the way for them to sell? Why or why not?
We get a lot of questions about real estate auctions – here are answers to some of the most
frequently asked:
Q: How do I know if I am a candidate for auction?
A: Do you have at least 25% equity in your home? If not, the auction way of selling is probably not for you.
Q: Will I get less money for my house if I auction it instead of listing it?
A: When selling their home, there are many factors that people don't always consider such as high carrying costs (mortgage, taxes, maintenance) and the time value of money. See our Time Value of Money comparison in our free Sellers Guide which compares the cost of selling a home via listing vs via auction.
Q: What if I am a developer needing to launch sales in a specific subdivision?
A: Talk to an auction consultant about your situation. They can give you advice and guidance on your best options.A well orchestrated auction can not only sell certain properties, it can build viral awareness and interest in the community.
Q: How do I choose an auction firm?
A: We recommend that you interview a couple of auction companies so you can get an idea of how they operate and what their terms are. Ask for references and check them. Ask for any certifications and special experience. Is the company responsive? Do they answer your calls promptly? Make sure that they answer all of your questions so that you have a clear understanding of the auction process.
Q: How can I be assured that all Dept. of Real Estate rules and regulations apply?
A:Brokers/Auctioneers must abide by all applicable state and federal real estate laws.
Q: How often will my property need to be shown?
A: Generally the auction company will host two to three Property Previews, where multiple potential buyers can come and view the property, and ask questions. You will not have to have your home ready to show at all times, as you do with a traditional listing.
Q: What if a potential buyer wants to a property inspection?
A: The buyers may make arrangements with the auction firm for any inspections they want to have done, as long as they are completed prior to the sale. On the sale day, the property is sold with no contingencies. Dept. of Real Estate disclosures are provided on the property prior to the sale.
Q: How do we know the bidders are qualified to buy?
A: The bidders financing is arranged prior to their registration to bid on a property. It is absolutely in their best interest to make sure their financing is securely in place, as they can lose their earnest money deposit if the sale does not close for any reason, including financing.
Q: How long does the sale take to close after the auction?
A: There is a usually a 30 day time frame for the buyer to wrap up loose ends prior to close.
Q: What is the Buyers Premium?
A: The Buyer’s Premium is a fee that is added to the winning bid to cover the auction company's fees.
Q: How much of a deposit does the winning bidder put down?
A: A deposit, usually 5-10% the final purchase price, is required on the day of the auction. The terms of the deposit will be prominently featured on the auction company's website. This deposit is non-refundable. The balance is generally due in 30 days or less.
Q: What if the sale falls through for some reason before closing?
A: In the unlikely event that a sale does not close, the buyer forfeits their earnest money. The earnest money deposit is then usually split between the auction company and the seller, you will want to verify exact terms with your auction firm. If the sale does not complete, the auction company will follow up with other bidders and let them know the property is available, and solicit bids from them.
Q: What if I’m already working with a Real Estate Agent and want to auction my property?
A: Most auction companies offer a broker co-op, so your agent can still earn a commission. Your broker will be compensated by the auction company at the close of escrow.
Do you have a question about auctions you would like answered?
For more information on real estate auctions call (877) 612-8494 or go to www.ajkaras.com.
Absolute Auction
This is an auction where property is sold to the highest qualified bidder with no limiting conditions, contingencies or amount, and is time-defined.
Although it may sound like the riskiest way to auction, Absolute auctions are actually the most successful. Absolute Auction promotes a sense of buyer urgency (to perform by a specific time or forever lose the opportunity to buy).
Absolute Auction is the only form of marketing that will convey this message. By using the Absolute Auction method, the auction company attracts the largest pool of qualified, competing purchasers thus creating maximum value.
Absolute Auction also demonstrates a higher level of seller commitment to potential buyers: they know without a doubt that the property will sell.
Minimum Bid Auction
In this form of auction, auctioneers accept bids at or above a published price. While this type of auction seems to reduce seller risk, Minimum Bid Auction also limits interest in the auction. Minimums must be low enough to act as inducements rather than as a hindrance. Minimum Bid Auctions typically generate considerably less marketplace interest than Absolute Auctions.
Reserve Auction
An auction where sellers reserve the right to establish a reserve price to (in effect), accept or decline any and all bids, or to withdraw properties at any time prior to the announcement of the completion of the sale (by auctioneers).Though seemingly creating a seller safety net, Reserve Auction also conveys (to buyers) seller reservations.
Of the three types of auctions, Reserve Auctions generate the least amount of marketplace interest.
For more information on real estate auctions call (877) 612-8494 or go to www.ajkaras.com.
Robert and Sandra Lee* found themselves in a position that is increasingly common in this slow housing economy.
When Sandra, a commercial real estate appraiser, was offered a new position in Boston in October of 2009, she and Robert immediately listed their home with a local real estate brokerage and began making plans for their move.
Excited by the new opportunity, the couple flew to Boston to find a home to rent, then back to Denver to pack and prepare for the move. It was decided that Robert would remain in Denver till their house could be sold, while Sandra went on ahead to Boston.
Weeks turned into months. Robert and Sandra took turns flying back and forth to visit each other on alternate weekends.
Occasionally someone would come to look at the house. A couple of potential buyers made offers the Lees did not feel were acceptable. Another couple was interested but could not qualify for financing.
Since their house was still not selling, they reduced the price twice, to no avail. The separation was wearing and stressful for both of them, not to mention the expense of paying for a rental and a mortgage every month.
By September 2010, with no sale on the horizon, they decided that they had waited long enough. They decided to call a local real estate auction company and find out what their options were.
“Some of what we learned surprised us,” Sandra recalls. “We had always associated auctions with desperate people and bank owned properties. Chaotic rooms full of people trying to buy property for pennies on the dollar. We never would have even thought to try auction. But we were so tired of waiting and being apart. It turned out there is another kind of real estate auction which we hadn’t known about.
"In this kind of auction, the auction company does this intense marketing campaign – for just your house. Luckily, since we had equity in our home, we were candidates.”
Robert and Sandra signed a contract with the auction company on Sept. 7, 2010, and the auction was scheduled for October 15, 2010. The auction company began their marketing blitz.
“Almost right away, we felt we were on the right track,” remembers Robert. “We were getting calls every other day from the auction company with new leads and questions people had. More people came to see our house at the two Property Previews than in the entire time the house had been on the market.”
The Lee’s house sold in ten minutes at the auction, freeing the couple from their financial burden and allowing them to resume living together again.
Were they happy with what it sold for?
“The high bid came in at about 90% of what we had hoped it would,” says Sandra, “but we had already been ready to discount it substantially when we had it listed.When you consider what we were paying out every month in mortgages, taxes and maintenance fees,” says Robert, “we were far ahead of the game even getting 10% under what we hoped for.”
* Names changed to protect privacy.
For more information on real estate auctions call (877) 612-8494 or go to www.ajkaras.com.
Your property can be sold in 60 days or less for the highest possible price.
The buyer pays the commission, not you! You collect the FULL PROCEEDS from the sale at the auction.
Qualified, motivated buyers compete to buy your property.
Strategic marketing to a huge pool of targeted buyers creates a sense of
urgency and brings buyers with cash in hand, prepared to buy!
Property sells with no contingencies.
With a professionally executed auction, there is a 99% closing rate.
In the rare case the auction does not close, there are many backup buyers.
Eliminates high carrying costs such as mortgage, taxes, insurance & maintenance.
For more information on real estate auctions call (877) 612-8494 or go to www.ajkaras.com.
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Denver's premier real estate auction company. Call us today to see if your client's property is a candidate for auction.
Our sales associates, auction teams, and corporate staff are dedicated to providing a level of service that is second to none in this industry. We consider ourselves as client advocates providing solutions to our client's needs in a timely and professional manner. Our goal is to satisfy our client's needs and maintain a level of integrity that makes us proud to be part of AJ Karas Auctioneers, LLC.
The number of residential real estate properties sold at auction grew by almost 50% in the last 4 years, and NAR predicts that we will see 1 out of 3 listings being sold via auction within the next few years. Real estate auctions are not just for distressed properties.
Owner Janelle Karas is an experienced real estate auctioneer who has sold hundreds of properties exclusively through auction since 2002. She teaches CE classes to real estate brokers so that they can learn how to represent clients at auction and accelerate the selling process – and sell property for true market value – even in a sluggish real estate market. Agents will learn how to tell if their client is a candidate for auction, how they can earn a commission on both the buying and selling side of an auction, the many benefits of auction, and much more.
Welcome to the Cutting Edge of Real Estate Auctions, Internet Marketing Technology, and Broker Training! AJ Karas Auctioneers, LLC has conducted hundreds of real estate auctions throughout the United States, from regular homes to multi-million dollar estates, from raw land for builders and developers to commercial property.
Our marketing team has years of experience targeting the exact market audience for each property, and building maximum awareness in an intense, comprehensive campaign that ensures the maximum amount of qualified bidders will compete to buy the property on auction day.
AJ Karas Auctioneers, LLC has an accomplished team of professionals with a successful track record of marketing all types of property.
Our team will treat you with respect and honesty. You can count on us for professionalism, responsiveness and RESULTS from contract to closing.
Contact Us to learn more about how you can partner with us and represent clients at auction.
Janelle Karas is the founder and owner of AJ Karas Auctioneers, LLC. "We first became aware of real estate auction in March of 2002, and by June 2002 sold property exclusively at auction. We successfully market and sell in subdivisions (smaller lots to large acreage), residential condos to luxury estates, as well as commercial and investment properties, at auction. We have agents that work all over the country to help buy and sell property using the auction method. AJ Karas Auctioneers, LLC provides innovation and vision to the real estate auction process. We developed an in-house operation system that effectively handles all aspects of the auction process--from contract to closing, along with a cutting edge marketing team. Our trained sales associates provide their clients with the most sought after auction team."
Janelle is an active member in the Colorado Auctioneers Association and the National Auctioneers Association. Janelle is a board member of the Colorado Auctioneers Association. Janelle is in the process of acquiring several accreditations and continues to take courses to further educate herself about real estate auctions. Janelle attended the College of World Champion Auctioneers in 2003 and personally oversees all real estate auctions. She is also very active in local and state charity auctions.
Janelle Karas
Janelle commenced her real estate career in 1990 in "list and sell" real estate and has experience in mortgages, real estate development, and investing. She has worked exclusively in the Real Estate Auction industry since 2002. She holds her brokers license in both Colorado and New Mexico. Janelle is an active educator, much sought after speaker and proponent of the auction process. Janelle is an instructor at Colorado Rocky Mountain Real Estate College, where she educates real estate brokers about the fastest growing segment of real estate-the auction event process. Janelle believes all fear will disappear through education and understanding.
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