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The simple answer to the question is the seller pays the marketing fee but it can be paid in various ways. In today’s upside down real estate market where the seller normally needs to sell quickly, the auctioneer will find that many homeowners are unable to front the marketing fee due to their current financial situation.
The auctioneer and homeowner can decide on several options. For example, if the homeowner agrees that the auction will be “absolute”, viz., sold to the highest bidder regardless of price, then our firm will front the marketing fee for the homeowner with the agreement that it will be repaid at closing.
However, if the auction is to be a “reserve” auction, meaning a minimum price level must be met before the hammer falls (property is sold), we will not front the marketing fee. Only in a few rare occasions where the reserve is very low compared to what we feel the property will sell for, we will fund the marketing fee and get repaid at closing.
The auctioneer should give the seller a proposed marketing schedule showing all the estimated expenses and get a check from the seller based upon this estimate. If the expenses are less than what was proposed, any excess expense money is returned to the seller with a statement showing where the money was spent.
The marketing fee cover such expenses as but not limited to: (1)newspaper, radio and TV ad, (2) signs, posters, photos and pennants, (3) postage and addressing (4) labor for tagging, clean up, security, etc.
For more information on real estate auctions, visit my website at www.canSellnow.com.
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We receive calls from homeowners who are considering an auction as a method of selling their home. These potential auction sellers will basically fall into two categories: a passive seller or a motivated seller.
The passive seller has a predetermined dollar figure in mind they want from the sale of their home. In a lot of cases, it is very unrealistic. They are very demanding of the auctioneer. They do not want to spend a lot of money in marketing the property for an auction, but they want a lot of people to show up at the auction. They have been told by friends, neighbors, or realtors, not to take less than such and such for the home. This kind of seller does not fit the auction criteria.
The motivated is very realistic and understands the current market. While not wanting to give away their home at auction, they understand the market value is determined by a group of potential buyers and the hidden costs of holding onto the property for an extended period of time. These hidden costs include the time value of money, additional mortgage payments if they were to use the list and sell method, additional pro-rata property taxes, continued maintenance expense on the home such as utilities and lawn, etc.
The motivated seller is an excellent candidate for an absolute auction, that is, the highest bidder will buy the home regardless of price. The absolute auction creates more excitement and draws larger crowds.
If you have questions about auctioneering, visit my website at www.canSellnow.com.