AUCTIONS OFFER QUICK RESOLUTION & MAXIMIZE VALUE
Experts now realize that nothing can truly replace the time-tested method of a free market auction when
selling anything from the most liquid of assets - stocks - to one of the least liquid - entire companies. The
same is true when selling commercial, industrial or residential real estate, estates and land.
Personal property, i.e. rolling stock, equipment, machinery, and inventories will also recover their fair
market value by selling at auction.
BENEFICIAL SENSE OF IMMEDIACY
Auctions create a level of interest and sense of immediacy unparalleled by other methods of selling, as
Non-serious buyers, who often waste a seller's valuable time, are eliminated.
The real interests of potential buyers, i.e. highest and best use, are conveyed and help the seller develop a
realistic price expectation;
The quick resolution of the auction method reduces carrying costs;
The auction method attracts a broader spectrum of interest than normal, since a full-scale marketing
program is conducted within a compressed time frame.
BEST TIME TO USE AUCTIONS
Although auctions can be used to sell effectively in many situations, two particular circumstances are
uniquely suited for this form of marketing:
1) When the asset is considered to be highly desirable; and
2) When a quick resolution of that property is required.
In the case of a highly desirable property, an auction helps gather many interested parties in one place at
one time, creating a highly charged bidding environment. When desire, competition, and ego all meet in
this atmosphere, sales prices can be maximized.
The owner's carrying costs are significantly reduced by the compressed time frame of the auction. Also, the
auction forces buyers into a decision making process which can mean almost as much as the selling
price to an owner under time pressure.
TYPES OF AUCTIONS
Once the decision is made to utilize an auction, the next step in the process is deciding what type of
auction to use. In general, sellers may choose between the following types of auctions:
1) Reserve auction in which the seller may accept or reject the high bid; or
2) Absolute auction in which the property is sold regardless of price.
After the auction type is decided on, the marketing plan is developed. This includes target audiences,
advertising, direct marketing, a sales prospectus, and financing. Finally, the marketing plan is executed,
the auction event takes place, and the sale is closed.
? Offers the seller another option.
? Creates competition among buyers--auction price can exceed the price of a negotiated sale. An auction
generates excitement and heightens buyer interest.
? Auction creates the most exposure in the shortest period of time.
? Requires that potential buyers prequalify for loans.
? Accelerates sales.
? Eliminates high seller carrying cost--such as interest, taxes, and maintenance.
? Auction brings interested buyers to a point of decision--they must act now or lose an opportunity to
? Auction is a true market forum.
? A seller can plan the date they want to sell.
? A seller sets the terms and conditions of the sale, maintains control of the asset throughout the auction
(depending on auction type), and actively participates in the sale process.
? Auction eliminates numerous, unscheduled showings.
? Auction takes the seller out of the negotiation process.
? Auction is an aggressive, advance-marketing program that increases potential interest in and awareness
of an asset.
? Seller is able to obtain liquidity.
? Seller is able to move on to other investments and free up capital.