Should you auction your home?

You may be wondering why on earth you would want to do such a strange thing. But a home auction doesn’t involve a lot of people standing around on your front lawn bidding on your house and contents, urged on by a fast-talking guy with a gavel. Rather, it is a sealed-bid marketing strategy that can be very effective in specific situations.

What’s involved is a very intensive period of marketing your home, followed by a pre-arranged date on which all prospective purchasers submit their offers. With the guidance of your real estate agent, you pick the most promising offer and begin negotiating with that bidder, giving them just a few hours to respond to your counter-offer. If you can’t make a deal, you immediately begin working with the bidder who made the next-best offer, again making a quick counter-offer and requesting a quick response.

The idea is to compress the time the house is on the market and achieve a fast sale at a good price. Because all bids must be submitted on the same date, prospective purchasers know they will likely have competition and have a strong incentive to make their first offer their best offer, or close to it. This usually means a short negotiating period, as well as a short listing period.

This strategy isn’t for everyone. But it may be just the thing if you want to curtail the period during which prospective purchasers can view your home, or have a deadline for selling.

If, for instance, you have small children and find it hard to keep the house tidy, an auction allows you to limit viewing to a week or two, during which your agent holds open houses on weekend days and you permit second visits on weekday evenings. Or perhaps you have purchased another home with a quick closing and want to sell your current home fast, to avoid the need for bridge financing.

The auction strategy works best when:

• demand for homes in your area is strong
• your home is attractive and well-maintained
• you have set a realistic asking price
• you have a clear idea of what is acceptable to you in terms of the purchaser’s financing, the closing date and inclusions (such as appliances)
• your agent is comfortable with the strategy and willing to put time and resources into aggressively promoting
• your home through advertising, open houses and word-of-mouth
• your agent is an excellent negotiator
• you have confidence in your agent and are decisive by nature

If an auction is an option you’d like to consider, discuss it with your real estate agent, who will be able to tell you whether or not it is a suitable strategy for you.