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SELLER’S GUIDE TO
COMPETITIVE OFFER SALES
What is a Competitive Offer Sale (Silent Auction)?
A Competitive Offer Sale is an accelerated real estate sale format designed to produce immediate interest resulting in multiple offers for a property. As a form of silent auction, the seller does not commit to a list price. Instead, an “advertised starting offer price” is published which is below the current market price for all comparable properties and buyers are encouraged to submit offers at or above the advertised price, with the seller retaining the right to negotiate and to accept or reject any offers.
Key components of the format are (1) a set deadline for offers to be submitted, (2) competition between potential buyers, and (3) the ability of the seller to negotiate conditions of offers.
The deadline discourages buyers from waiting to make offers as prices continue to fall.
The competition produces the highest possible offers – and the seller may continue to negotiate the price after the competition ends.
This format typically achieves the sale of real estate quicker than the conventional method. With no set asking price and a pre-determined date of sale, interested buyers participate because they feel they have more control over their offer, but they realize someone else could purchase the property if they don’t act NOW.
Why must I use an Auctioneer to perform a Competitive Offer Sale?
Ohio law requires that an agent of the seller of real estate possess an Ohio Auctioneer’s License to perform sales which include the soliciting of competitive offers. Auctioneers are also the only real estate agents permitted to solicit offers without advertising a list price. Our auctioneer is fully licensed as a real estate agent and auctioneer.
A Competitive Offer Sale is designed to produce offers.
Our “Advertised Starting Offer Price” encourages buyers to view the property and make offers. Too often, as properties don’t sell, the list price must be reduced, often many times, before an offer is submitted. Rather than putting the seller through the TIME, frustration and apprehension of continual price reductions, the “Advertised Starting Offer Price” starts low and encourages many more buyers to be involved, producing multiple competitive offers.
A Competitive Offer Sale reduces the cost and risk to the seller.
A Competitive Offer Sale is designed to offer the seller the advantages of a live auction without the risk of the seller’s substantial marketing funds. The seller retains the right to refuse the highest and best offer produced. (You don’t have to “give it away”!)
Competitive Offer Sale Marketing is designed for the Seller who wants to avoid the appearance of distress in today’s market.
Today, too often the appearance of financial distress that a “live” auction produces can cause motivated sellers to avoid the live auction format. A Competitive Offer Sale is designed to utilize the realtors’ Multiple Listing Service (MLS) to market the property to agents. It also relies upon extensive internet marketing*. A lawn sign is not required.
With no newspaper advertising and no direct mail promotions, the sale appears to all, except those who are truly interested, as a “regular” sale.
*Research indicates that approximately 87% of real estate buyers search on-line before making a purchase. Today, the Internet is the dominant marketing venue.
Reasons you should use the Competitive Offer Sale method to sell your property.
- It's fast. From the date you sign your Competitive Offer Sale agreement to the end date is typically only 4-6 weeks. Allow an additional 45 days to close the sale.
- You can make plans with confidence. You will know your contract and closing dates.
- Buy your new house and sell your current house quickly so you can avoid expensive holding costs.
- Sellers can buy a new house first to get the house they want at the best price and best financing conditions knowing that they can sell their current house quickly.
- You can avoid the long-term headaches and constant intrusions of showings and open-houses.
- You can avoid the worry of “will it ever sell?”, which is a major concern in the current market.
- In a declining market, you can avoid the property value losses which are part of waiting to sell.
- Every effort is made to produce a Non-Contingent offer. Buyers are encouraged to inspect the property before making their offers. Buyers are encouraged to obtain a full pre-approval letter from their lender to avoid financial contingencies.
- Your property can be sold “As-Is.” The “highest and best” offer should take property condition into consideration to arrive at the price offered. Removal of all contingencies before acceptance of the offer is encouraged.*
*The seller retains the right to refuse an offer that contains contingencies. Our objective is to produce offers and create competition among the buyers. Ultimately, the Seller will determine which offer is best. The seller may accept an offer for a higher price which contains contingencies, rather than one for a lower price with no contingencies.
Is your house a good candidatefor a Competitive Offer Sale?
Most properties are good auction candidates, but some are better than others. Specifically, some sellers benefit more from this method.
The best candidates fall into the following groups:
- Vacant houses. Owners who hold these properties experience massive losses from holding costs, equity opportunity losses, potential damages, and, in the current market, ongoing loss of property value. These sellers must sell as quickly as possible.
- Estates. Usually estate houses are vacant, so the estate or the heirs suffer the same losses described above. In addition, most estate homes need updating and repairs to be salable. If completed, these investments seldom repay the money spent. Because Competitive Offer Saleproperties are sold “As-Is,” these properties can be sold for a better net income from the sale.
- Unique homes. Lakefront, riverfront, homes with extensive acreage, and expensive showplaces all benefit. Typically, these properties are difficult to price and may stay on the market for a long time.
- Seller needs a quick sale. Relocation, divorce, medical issues, financial crises, etc., all benefit from the speed, ease, and “As-Is” nature of auction sales.
What does the Competitive Offer Sale cost you, the Seller?
If your property is currently listed, the commissions you offer your listing agent and the buyer’s agent remain the same. The seller pays the auctioneer an additional separate fee of up to 2% of the selling price (minimum $1,500). **If your house is vacant and not selling, that's less than 2 months of holding costs.**
Remember, if the auctioneer does not produce an offer that’s acceptable to the seller, then no fee is paid to the auctioneer.
A Competitive Offer Sale typically requires no up-front marketing investment by the seller, as do “live” auctions.
We also encourage the Seller to provide a Home Warranty. At the cost of approximately $400.00, this is another assurance to the buyer that the costs of certain common problems will be covered in the first year of ownership.
Why choose Real Estate Auction Services?
When you choose Real Estate Auction Services and the Howard Hanna name, you can be confident that you are working directly with highly trained and experienced auctioneers and realtors, licensed in both fields by the State of Ohio. Unlike some companies who utilize sales staffs for much of the process, your auction will be guided directly by one of the partners.
Unlike members of a large staff from an out-of-town company, we are deeply involved in your success. Because we are local, our reputation is at stake with every transaction, and in our business, reputation is everything. Unlike our competitors, we make every effort to involve the thousands of local realtors in the auction process, increasing the scope and effectiveness of our marketing campaigns.
In addition, we have the support of the undisputed leader in real estate, Howard Hanna Real Estate Services. Howard Hanna Real Estate Services stresses education and training, making their agents the most highly trained in the industry.
Ultimately, your choice should come down to this. We are here to serve your needs. We’ll be honest with you and we’ll do everything we can to help you achieve your goals. Honesty, integrity, and service. That’s it. That’s the Auction Services difference.
Michael J. Fergus, Auctioneer and Realtor®
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