Auction houses Vs Estate Agencies

I found this artical on Property 24 website and thought it may be of some interest to you. Enjoy.

04 Oct 2012

In the past, a home on auction would probably have belonged to a distressed seller, someone who had fallen on hard financial times and had his or her home repossessed by the bank.

Today, however, more and more estate agencies offer auctions as an option to their sellers, as an addition to the more traditional estate agency sale. Buyers in a rush to sell their properties may find the idea of an auction more appealing, as properties move more quickly selling this way.

Heidi Franck, Group COO at One Property Holdings outlines how to decide on the best option for your property. The residential property market is slow and due to the current economic climate, there is little growth.

That said, sellers will still sell their properties, but it is taking much longer than previously, depending on its value. “Houses that are priced below R 1 million will sell more quickly, as there are more buyers in this market than for the more expensive properties,” Franck explains.

To this end, buyers in a rush to sell their properties may find the idea of an auction more appealing, as properties move more quickly selling this way. Most sales that take place on auction do not have conditions or ‘subject to’ clauses, Franck says. Buyers at auctions are required to put down a deposit and have been pre-approved for a bond by their banks prior to bidding, so the sale on auction is unlikely to fall through due to the inability of the seller to qualify for a bond.

Moreover, it frees the seller from dealing with buyers who are not serious - if they make a bid on the house, they generally have their ducks in a row and mean business. On the downside, commissions charged by auctioneers are usually higher than those of estate agents. This is due to the intensity of the specific marketing that is done around an auction, says Franck. “While an estate agent is able to place an advert in the paper, bringing in a pool of buyers that they can then refer to, as well as all the other properties on their books, an auctioneer’s marketing has to be more targeted – and this comes at a premium."

That said, the buyers that arrive at the auction have specifically chosen to bid on your house alone, says Franck, and there is a greater chance that they will commit to a sale if successful, than people who have simply popped in to see a show day and like what they see.

On the other hand, when going with an estate agent, there is the potential to get a higher price for the property, she says, which is mainly due to the fact that estate agents are usually area focused and have an intimate understanding of their specific market. "Optimal market knowledge together with the incentive of a higher commission that results from achieving a higher sales price will inevitably drive a more lucrative sale.”

According to Marc Zlotnick, Managing Director of Forsite, there are positives and negatives to both methods. “Auctions are quicker processes, but the commissions are higher and the agent area expertise may not be as good. "Traditional estate agency sales take longer, buyers are messier to qualify but the agents are more negotiable and the parties feel as if they have been more participative in the deal.” At the end, however, true market value will prevail – because property is bought and sold when a willing buyer and a willing seller agree on a price in an open market.

This Artical was brought to you buy Property 24

Why Auction Your Property Part 4

Firstly sorry guys for not writing to you on Monday.

What I will do is do two posts today to catch up.

So what will we be talking about today?

Auctions have the power to unlock the value of your property.

Mmmmm, What do I mean when I say the auction has the power to unlock the value of your property?

Well it is pretty simple. There is basically five steps to this.

1st is the Connection. Auctions are able to execute mulitfaceted global marketing campaigns. Each campaign tailored to your property. Throughout the campaign the auctioneers is able to put the spotlight onto your property generating expanantially more visibility and exposer than what you would normal recieve from marketing the property yourself or through an estate agency.

2nd The Contact. AS a result of the comprehensive maketing campaign buyers around the globe enquire about the property. During this pariod of time the auctioneers will contact each potential purchase and discuss the property with them and answer any of the purchasers questions. The auctioneers will also invite these potential buyers to attend a mini show house or if theyt cannot make that show house they would schedule a private showing.

3rd The Due Diligence. Potential buyers are provided with a comprehensive bidder information package. This information provides the buyer with all the necessary information required for them to become familier with the auction process and the property so that when it comes to auction day they are prepared and ready to bid aggresively. Now this is a very important step in the process as all properties are sold as is, there is no repairs to the seller, no contingencies, financing or otherwise.

4th The Auction. The auction is the time when everything comes together. The auction maybe held at the property, our at a venue where the auctioneers will auction multi properties and in some cases auction the property online. The auction is when multiple bidders compete to purchase the property for the highest possible price.

5th The Closing. The closing will generally take place no more than 30 days after the auction. At th closing the buyers and sellers accomplish their goals they set out to achieve. The buyer will be all excited about their new purchase and the seller will be over the moon becasue they have achieved what they have been trying to do for along time.

By following these five basic steps unlocks the true value of  your property.

Thanks for regarding.

As usual, if you have any questoins or comment you would like ask or leave please do so.

Regards

Mornay