• Alex

SELLING LAND AT AN AUCTION

Whether you’ve only recently decided to sell your land or have tried other possible methods in marketing it, exploring the option of selling it at an auction is something worth considering. An auction offers exclusive benefits to land owners who would like to perpetuate control of the selling process.

WHAT TO EXPECT

Perhaps the first thing that comes to mind when deciding to sell your land at an auction is the advantage of speed and certainty. A property for sale can remain on the market for months, even years when trying to be sold through ordinary methods. Contrary to that, selling at an auction accelerates the sale, exposing the property to a list of qualified buyers and potential purchasers. Also, a quicker disposal means a reduction of long-term carrying costs such as taxes and maintenance.

Another great benefit of selling your land through an auction is that the event itself is attended by willing and interested buyers themselves, either in person or online. These are either investment buyers, corporate buyers, or private individuals who are capable of paying a 10% deposit on the auction day itself, should they find a property worth bidding for which ends up being sold to them. After securing this deposit, the buyer is bound to complete the payment on the agreed upon terms set by the seller.

In selling at a public auction, your land is sold as-is. This means that there are no contingencies attached to the bid. As a seller, you are required to sign property disclosure forms which should reveal all known conditions of the property. Though this is not a warranty or guarantee for the things disclosed, still it will notify the buyers of issues which should enable them to decide if they would like to bid for a property or not.

In deciding on the selling price, the seller sets the reserve based on the market value, comparisons to similar properties, and on independent appraisals. It is not uncommon that the reserve price falls somewhere from 10% to 15% below market value. And even on the auction day itself, the reserve can be lowered if bidding comes up short.

HOW TO LIST YOUR LAND FOR AUCTION

Potential buyers come in with a strong demand for different types of properties offered at a public auction. A property that is considered unique can prove difficult to put a price on. By putting it up for an auction, the market price will be determined for you as bidders will be paying the price they feel your land is worth.

Once you’ve decided to sell your land at an auction, your next step is to decide on an auctioneer. Specialists in this field vary in cost, reputation, and experience, so it would be best to shop around to find the one you will feel most comfortable with. You could start with a popular site online called LandWatch. http://www.landwatch.com/Auctions

The more established companies tend to have the largest database of potential buyers which would mean that the details of the land you are selling will be seen by a bigger audience prior to auction day. It would be a considerably safe choice to go with these companies, but you should also be prepared to pay for their fees, and also for advertising and legal costs that come with the sale.

THE RESERVE PRICE

Prior to the auction, you and the auctioneer will need to decide on a reserve price. This price is the minimum that you will accept once the bidding begins. It is paramount to come up with one that is set at the right level because once it is reached, there is no going back and your property will have been sold.

It is the auctioneer’s decision on what the guide price of your land should be. This guide price should be a well thought of amount that is low enough to entice potential buyers to attend the auction with the intention of bidding for your property, but not too low that buyers are put off as the price is driven up much higher during bidding.

THE AUCTION

Auctions take place in a large function room or hall, or nowadays, simply online. As a seller, you are not obliged to attend but you may do so if you wish to. Hopes are high when selling at an auction, but should your land for sale not meet its reserve price, you can still negotiate with a potential buyer and sell it at a price lower than the reserve. This should be done after your lot has finished at the auction. By doing so, the auction terms and conditions still remain and the contract can move forward as long as a price is agreed upon.

In the event that your property does not sell at all during the auction, and even after securing the auctioneer’s costs and advertising fees, do appreciate the fact that at the very least, word is out that your property is for sale and there might still be some future buyers willing to make that sale with you out there.

Selling your land at an auction offers you a bit more certainty with a fast and efficient process. If you are in search of a way to quickly unload your property with the possibility of still getting the highest value, then selling at an auction may be the right move for you.