8 Factors That Influence Real Estate Auction Results

Property auctions in a highly competitive real estate market like Chicago can be intimidating for both buyers and sellers. Investing wisely in a new property – or getting the most out of your current investment – rely on the ability to understand and efficiently manage all aspects of the auction process. Whether you are a buyer or seller, these eight real estate auction tips will help ensure that your experience is a more financially rewarding one once the gavel falls. 

Location

Much like successful realtors, upper echelon real estate auction agents also stress the importance of “location, location, location.” Depending on market forces and buyer interest, certain geographic locations and zip codes tend to perform better on auction day than others. As a bonus tip, before participating in an auction, be sure to check out comparable properties in the area first. 

Investment Activity 

If you are wondering if you need a realtor for an auction, the simple answer is “no.” However, a good reason to work with one is the fact they can help you make a better-informed decision by identifying a market boom versus a bust. Why is that important? In general, a property is more likely to sell at auction when the value of real estate loans is at its peak. 

Realistic Expectations

Sure, everyone that buys or sells at auction would love to get an unbelievable deal that makes them rich virtually overnight. Realistically, that’s not going to happen. However, you can still walk away feeling satisfied with your transaction by setting realistic expectations beforehand – including a fair sales price, reasonable contract terms, and allocating plenty of time.

Desirability of the Property

As a buyer or seller, yet another factor to consider is how appealing the property is to fellow investors. Before deciding whether to bid or not, be sure to research variables that include location, conditions, and the value of comparable surrounding properties. As with any type of major purchase, due diligence is key when preparing for a real estate auction. 

Type of Auction

There are also several different types of real estate auctions, including reserve auctions, sealed-bid auctions, absolute auctions, and minimum bid auctions. And although deciding which format is right for you isn’t always easy, it can be a real deal maker or breaker when your investment weighs in the balance. As a result, be sure to research the pros and cons of each auction type before deciding which one most aligns with your objectives. 

Effectiveness of the Marketing Campaign

Every commercial real estate market goes through peaks and valleys that mirror the local or national economy. In the auction game, surviving good markets and bad relies on the ability to make your property stand out from the pack in the eyes of prospective bidders. 

As the property owner, a well-devised and implemented marketing and advertising strategy that grabs the attention of multiple buyers is the "golden ticket" to enjoying auction day success. Since we now live in the Digital Age, taking advantage of innovative technologies and online marketing tools to showcase your property can be a real game changer when it's time to sell. 

Property Preparation 

And finally, a property’s condition – along with the condition of surrounding properties – will make it less or more desirable when it’s put up for sale at auction. Although paying for minor repairs or a fresh coat of paint may cost you a few dollars upfront, doing so could pay dividends in the end once the bidding is over, and the auctioneer’s gavel falls! 

What Is an Auction Broker?

A real estate auction broker is someone who can refer a seller to an auction company in exchange for a modest referral fee. That “referring” broker may also be instrumental in convincing the seller why an auction is their best option for purchasing an investment property. 

What is a referring broker responsible for? 

Some of the responsibilities of a referring broker may include: 

• Helping the seller assess their needs, the property, and the market to determine if selling at auction is the best option 
• Connecting the seller with a reputable real estate auction company 
• Send notice to the MLS indicating that the formerly listed property will be sold at public auction instead 
• Gathering information to include in the auction contract 

There are also cooperative (selling) brokers. A cooperative broker helps the owner sell the property while serving as either a subagent, buyer’s agent, or dual agent. 

When working with a potential buyer, a “cooperating” broker may serve many roles during the auction process, including those that take place before, during, and after the actual auction date. 

As a buyer or seller who’s participating in a real estate auction, a referring or cooperating broker can be an invaluable resource that helps you navigate the entire process as all your objectives come seamlessly together! 

Your Experienced Real Estate Auction Brokers in Chicago

As a commercial property owner, it pays to be well organized and informed when considering selling your property via auction. As part of our Brokerage Services portfolio, Millennium Properties offers both live and sealed bid auction services for commercial property owners throughout the Chicagoland area. 

We market and promote your auction property through a variety of online ads, eblasts, social media, and other digital tools to showcase your property and drum up interest from investors and buyers. Reach out to Daniel Hyman at Millennium Properties today to learn more about auctions or to submit your property for our next auction.