Real estate auctions add a jolt of excitement to selling land. The energy! The adrenaline! The thrill of watching the clock tick down! Not only are auctions fun, it’s a great way to sell lots of land in a short amount of time.
If you are new to auctions, all the different types of them might be overwhelming. Here’s a quick breakdown of the different types of auctions.
- Absolute: No minimum bids. The land is sold to the highest bigger, regardless of price. This type of auction is better for less expensive land where the owner is more relaxed on the price. Keep in mind though that since there is no safety net for the seller, you do run the risk of losing money.
- Minimum-Bid: The lowest acceptable price for properties are pre-determined by the seller. This gives the seller a safety net that they don’t have in absolute auctions.
- Multi-Par: Multiple parcels of land are combined in each lot. This type of auction is perfect for sellers who want to move vast quantities of land. Since it is more complicated, you will need knowledgeable staff.
- One of the benefits of online auctions is that it can be done from home. An increasing number of auctions are moving online for the convenience (bid from your living room or on the road!) and cost-savings (don’t need to rent out a room for the event).
- Reserve: In this auction type, the seller has the unique right to reject the highest bid. If you or your client is selling high-value land, this could be perfect. Some buyers don’t like these auctions because they don’t like the uncertainty of potentially being rejected for the property, even if they have the winning bid.
- Sealed Bid: Sealed bid means all bids are confidential. This definitely takes some of the adrenaline out of the room but protects people’s financial security.
Now that we’ve covered the different types of auctions, here are some ways to have a great auction.
As A Buyer
If your auction is online, a strong connection to Wi-Fi is key. Spotty Wi-Fi has lost people their bids on incredible lots. For example, if two people submit bids at the very last second of an online auction, the person with the faster internet wins. If Wi-Fi in your area is spotty, see if any cafes, restaurants, or libraries nearby offer free Wi-Fi.
Set Limits Beforehand
In the heat of the moment, it is easy to bid more than you should have. A good way to prevent that is to plan out in advance how much land you need and how much you can afford to spend — and stick to it! Plan on a more conservative budget, but if there is a truly amazing plot of land that you know you can turn a profit on, don’t shy away from it. Skip out on a few other bids if that can secure you getting the lot of your dreams.
Do Your Homework
Of course, you’ve already looked up the price and acreage of the plots you are interested in, but did you do a title search? A title search is the best way to know the regulations and rules that come with a certain property.
If you can, drive by the property to get a closer look. Sometimes, you’ll be able to spot obvious problems that were glossed over in the description. If the property is states away, there is always Google Earth!
As A Seller
Get A Great Auctioneer
Auctioneers are the life and energy of any auction. Who doesn’t love their mind-bogglingly fast chants? If you’ve never been to a live auction before, watch some of our favorite chants to see what all the fuss is about. Find someone with great energy who can keep up!
Know What Makes A Property Good To Auction
Property that is in good condition in a desirable location is likely to get lots of bids. Keep a close eye on the market to see what land types are selling well in your area. Some people think that auctions can be a good place to get rid of properties that they haven’t sold in ages. This isn’t true. Buyers want to be excited about a property and feel like they are finding something new so they are less likely to bid on a property that they’ve seen before.
Work With An ALC
They aren’t called the best in the business for nothing! Not only do ALCs have extensive knowledge of multiple land types, there are many ALCs who specialize in land auctions. When using the Find A Land Consultant tool, be sure to go to the ‘Advanced Search’ feature and click ‘Auctions’ under ‘Service Specialties’.
Real estate auctions are amazing places to sell land and network with other professionals in the land business. Get your bidding paddles ready and have a great auction!
About the Author: Laura Barker is the Membership and Communications Specialist for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and has been with RLI since October 2017.