We’ve told countless people that when a seller (owner) has “urgency,” “equity” and “reasonable expectations” that an auction is a perfect solution. Such was the situation for us and our client on December 5, 2020, when we sold this property at auction for $176,200.
This property is located in Minerva Lake, a community in Columbus, Ohio. It is surrounded by homes valued in the $200,000 – $275,000 range, and this particular property borders the water (the lake.) It is the last house at the end of the street and built in 1959. It had a new roof in 2018/2019.
While the outside of the home might be considered original in many respects, the interior was in need of substantial repair and updating. The county auditor had valued this property at $131,500 at the time of our auction, with a pending update to that value of $164,700.
When the owner of this property died we were contracted to empty the home and sell any items of value. Thereafter, the Franklin County Probate Court appointed appraiser inspected the property and appraised the market value to be $29,000. Our auction was then to be conducted with a minimum bid of 2/3 of that value, or (roughly) $19,333.
Auctioneers have told me that if the “reserve” is published, nobody will bid past it. For this auction, our reserve was published ($19,333) and the high bid exceeded it by 811.4%. We wrote more about this misnomer here: https://mikebrandlyauctioneer.wordpress.com/2020/11/20/bidders-wont-bid-past-disclosed-reserve/.
We began our marketing including a large sign on the property and received in total 72 calls. An open house was held for one hour on November 16 with 52 in attendance. Another 47 private showings were scheduled. 35 bidders registered auction day. The auction was live-only, with no online bidding.
Terms of this auction included a 10% buyer’s premium + $200, $2,500 down day of auction and buyer accepts the property in “as-is” condition with no contingencies in the contract. The buyer also agrees to pay all closing costs and close in 30 days. Our seller was bound to provide for free and clear (marketable) title.
In our program, we also note that any property is “subject to prior sale.” In other words, interested parties can offer prior to the auction, and our seller has the right to accept any offer and thus cancel the auction. For this property, seven offers were submitted prior but all rejected by our client.
This was a particularly good circumstance for an auction. Not only did we have urgency, equity, and reasonable expectations, but we had a property with a somewhat unknown market value. Appraisals ranged from $29,000 [from an appraiser privy to the interior condition] to as high as $131,500 [from an appraiser with no information other than an exterior visual inspection.]
Further, we had likely the most important feature of any auction – the “prospect of a deal.” We had bidders who thought they might get a $100,000 property for as little as about $21,500. Some thought they might get a $30,000 property for as little as about $21,500 … and others who apparently thought they might get a $176,200 property for as little as about $21,500.
Marketing is also important — and we placed this auction on social media platforms, various other websites and coupled all that with a large sign in the front yard. Of course, marketing makes no difference if there is no prospect of a deal. In other words, advertising bad news doesn’t attract bidders/buyers.
If your client has urgency, equity, reasonable expectations, there’s the prospect of a deal and it’s adequately marketed, it’s very likely you’ll have a successful auction and a happy client. Lacking any (particularly the prospect of a deal) is detrimental to the seller. We’ve written several times about that concept, including here: https://mikebrandlyauctioneer.wordpress.com/2018/03/12/what-drives-bidders-to-an-auction/.
As an auctioneer are you looking for your next successful real property auction? See if you can find urgency, equity, reasonable expectations, and a seller able to truthfully advertise the “prospect of a deal.” With those ingredients, you are assured of a lot of interest in the auction and likely very good results for your seller.
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services, and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, and an Instructor at the National Auctioneers Association’s Designation Academy and Western College of Auctioneering. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education