Most people list their homes on an open market when they're ready to sell. However, there are a variety of other ways to unload a house, one of which is to sell it at an auction. Though previously the domain of banks and investors, house auctions have begun attracting regular homeowners over the past few years. Here are three reasons why to help you decide if this option is a good one for you.
Quicker Closing Time
One benefit selling a home at auction has over the traditional route is you get to the finish line a lot faster. In general, closing on a home purchased at auction will take 30 days or less. In comparison, the average closing time on homes purchased the normal way is about 50 days. This is usually because buyers must have the cash up front to purchase the home at an auction, whereas you may have to wait for a potential buyer to be approved by his or her bank if you sell the normal way, which can take a bit of time.
Another related advantage is you will usually know the exact date the closing will occur. Auctions have specific sales timelines they follow. Bidding on the home takes place on a preset date, you have until a certain time to accept the offer, and then money and documents will change hands within a specific time period after the sale.
You will know from the start what the timeline is, which can help you plan your transition and save money in the process. For example, you'll know the date when to turn utilities off and when to cancel your homeowner's insurance.
Serious Prequalified Buyers
Possibly the biggest advantage auctions have over traditional selling is there are no window shoppers. All the buyers at the auction are serious and ready to take possession of the home once the auction ends. Buyers typically have to go through a prequalification process, meaning anyone who wants to place a bid on your home must prove they have the cash to pay for the purchase if they win. Additionally, many auctions require potential buyers to put down non-refundable deposits, which scares away less serious people and reduces the risk of a buyer backing out at the last minute.
This helps save time and minimizes the stress of worrying about the deal going awry the day before you're supposed to close. Be aware, though, buyers who purchase homes at auctions are looking for deals. Therefore, there's a real possibility you may not get as much as you want for your home, especially if you're selling it as-is. At the same time, there's no upper limit either. So you may end up getting much more than you expected, particularly if your home is located in a competitive area.
One thing many homeowners find annoying is the constant showing and touring of their homes, especially when they're still living in them. Auctions can make this aspect of selling a home more palatable. Typically, auctions arrange for potential buyers to see the home on a specific day (or set of days) before the bidding, so sellers don't have to deal with surprise or last-minute visits by shoppers. In some cases, bidders are only allowed to look at the exterior of the home and not the interior. This reduces the amount of upheaval you experience while selling your home and lets you focus on other things, such as finding a new house or taking care of your family.
While there are many benefits to selling a home at an auction, there are some challenges you may run into as well. Talk to a realty agent about this option and go over the advantages and disadvantages and provide advice for success.