Brokerage or Auction?

Selling your Real Estate
in Today’s Market

We specialize in Country Clubs, Golf Courses, Residential Golf Communities, Leisure Properties, Commercial Properties, and Land. Deciding to sell commercial real estate is an important decision. Do not make a traditional brokerage your default choice. While most sellers are familiar with conventional real estate brokerage, we believe sellers should educate themselves more fully about the use of Accelerated Methods such as Auctions, in the current real estate market. Both methods have strengths and drawbacks.

Taking The Auction Route

An Auction sends a strong time sensitive signal to potential buyers of real property. In a “mark to market” environment an auction is a hardworking event not just a public declaration of your desire to sell. A sense of urgency is created in buyers because every potential buyer has to be ready to buy on auction day.

There is no need to establish a “negotiable” list price although you may set a confidential reserve price which is not disclosed to prospective buyers. If offers don’t meet the seller’s reserve price, there is no obligation to sell.
Potential buyers are pre-qualified by non-refundable cash deposits, a Bank Letter of Credit, or other means.
It is not necessary to negotiate the sale price of your property with anyone. Potential auction buyers negotiate the price with each other.
Competing bids placed by knowledgeable qualified buyers establish true market value.
Since due diligence is accomplished before the date of the auction. There are no contingencies for your buyer to exit the deal after a bid is accepted.
On auction day the sale is final, the closing is in 30 days or less following the auction date.
The entire process normally takes about 90 days, potentially reducing your operating costs, taxes, and interest on loans, which can offset the costs of the auction itself.

Listing Real Property For Sale

You’ve probably listed and sold real estate through a broker before. Typically, you list your property for sale at a price that you believe is the optimum value for the property. The broker brings you offers from qualified buyers and you select the best offer. Listing a property for sale tends to be more effective in a strong real estate market and less helpful in a weak one.

Here’s why: In good or bad times buyers are psychologically prepared to offer you less than list price. They bargain down from the list price and may lack a sense of urgency believing that delay strengthens their bargaining power. These tendencies are greater in a fragile market because fewer buyers will be considering the property or making offers and active buyers know this.

Moreover, you will need several offers from qualified purchasers in order to confirm your property’s true market value. In a weak market these may not be forthcoming. Plus a property on the market for an extended period can decline in real value as holding costs accrue.

Taking The Auction Route

An Auction sends a strong time sensitive signal to potential buyers of real property. In a “mark to market” environment an auction is a hardworking event not just a public declaration of your desire to sell. A sense of urgency is created in buyers because every potential buyer has to be ready to buy on auction day.

There is no need to establish a “negotiable” list price although you may set a confidential reserve price which is not disclosed to prospective buyers. If offers don’t meet the seller’s reserve price, there is no obligation to sell.
Potential buyers are pre-qualified by non-refundable cash deposits, a Bank Letter of Credit, or other means.
It is not necessary to negotiate the sale price of your property with anyone. Potential auction buyers negotiate the price with each other.
Competing bids placed by knowledgeable qualified buyers establish true market value.
Since due diligence is accomplished before the date of the auction. There are no contingencies for your buyer to exit the deal after a bid is accepted.
On auction day the sale is final, the closing is in 30 days or less following the auction date.
The entire process normally takes about 90 days, potentially reducing your operating costs, taxes, and interest on loans, which can offset the costs of the auction itself.

Listing Real Property For Sale

You’ve probably listed and sold real estate through a broker before. Typically, you list your property for sale at a price that you believe is the optimum value for the property. The broker brings you offers from qualified buyers and you select the best offer. Listing a property for sale tends to be more effective in a strong real estate market and less helpful in a weak one.

Here’s why: In good or bad times buyers are psychologically prepared to offer you less than list price. They bargain down from the list price and may lack a sense of urgency believing that delay strengthens their bargaining power. These tendencies are greater in a fragile market because fewer buyers will be considering the property or making offers and active buyers know this.

Moreover, you will need several offers from qualified purchasers in order to confirm your property’s true market value. In a weak market these may not be forthcoming. Plus a property on the market for an extended period can decline in real value as holding costs accrue.

Keep in Mind

An auction requires an upfront cash outlay on the part of the seller for a multi-media marketing campaign. Our ad agency prepares a line item media budget tailored to your property and your market. Although every property may not sell at auction, we do not recommend an auction unless we think will be successful. Auctions are a significant commitment of time and expense for both the seller and the broker/auctioneer. Keep in mind that if a sale does not occur on auction day the marketing effort may still trigger a post auction sale.

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