[I know that we get all kinds of offers throughout the listing period but what it comes down to is the RIGHT buyer for that house. How many times have I worked with a buyer and heard, "I would like this house at the right price" and that "right price" might be thousands off of true market value. I would think that AUCTIONS would mean that if that right buyer were not in the auction that day, your home could potentially sell for a lot less than otherwise. ]
I get many questions about the true "market value" of real estate sold at auctions. The big concern is that it will not sell for its' true value, such as was implied above. Well, how is the true value of real estate determined?
Have you ever had two or three appraisals done on the same property and got three different values that were not even close to each other? Let's go back for a moment to real estate school and remember what we were taught about valuing a home, viz., by pulling comps, i.e., similar square footage, style, same sub-div., home sold in last 3 to 6 months, etc. You understand what I am saying.
Now, with home prices dropping across the country due to the sub-prime lending problem and other problems the lenders are having, would you use a sale or appraisal that was done six months to a year ago in an area where values have decreased, say 15 to 20%, in the last two to three months? I believe homes in some parts of California have dropped much further.
Or let's use another example. I know an individual that paid 15% over listed price because he lived in the home as a youth and it had sentimental value to him. Would this extra value, show up on an a comp?
I know my real estate friends will probably disagree with me, but a comp, current MLS listing, or an appraisal, or what the seller wants, does not determine the value of a property. The market does. What a willing buyer(s) is/are willing to pay for that property.
In most real estate transaction, the price goes from high to low. Meaning, you list it for a certain price, if no immediate sell in a month or so, you drop the price because the market will not support the price. When you get a contract, it is usually lower than the list price, full of contingencies, thus reducing the net even further to the seller. With an auction the price (bid) starts low , then goes higher.
If I have 10 to 12 bidders in a room that have deposited a certain amount of money in certified funds in order to bid, and have been approved for a loan, not pre-qualified, as they must close in 30 days, bidding on a home, the bidding stops when other bidders do not see value above the last bid. In this case, market value is established. The home is sold as is with no contingencies.
What are your thoughts and comments? Go to my website www.canSellnow.com and learn more about selling homes using the auction method.