REASON #1: It's a Quick Sale
An auction affords the property owners the opportunity to dispose of property now at today's prices, rather than tomorrow's prices. Time is money. Depending on reinvestment rates, $95,000 or even $90,000 today is likely more valuable than $100,000 next year.
Reason #2: High Carrying Costs are Avoided.
All property incurs costs curing it's private negotiating marketing period - debt service, real estate taxes, insurance payments, maintenance and sometimes security. All too often, the carrying or holding costs of real estate during a private negotiated marketing program won't be recovered in a higher selling price. In effect, the sooner a property sells, the greater the bottom line dollars in pocket for the seller and/or greater the savings that may be passed on to the buyer.
Reason #3: Property Market Value can be Demonstrated.
Instead of relying on the appraiser to assigning an asking price, the auction process demonstrates the value of the property to sellers and potential buyers. Selling property by the private negotiated method, you may wonder whether you couldn't have bargained higher. But if the property is sold at auction, the proof of market value is in the process itself. Moments before the final bid, another serious buyer bid just a few dollars less. The selling price is truly market driven.
Reason #4: Auctions Receive Maximum Market Place Exposure
Auction companies employ saturation marketing techniques, such as the Internet, during the four-to-six weeks prior to the event itself. The marketing time frame is more condensed than in traditional methods and, therefore less expensive.
Reason #5: Auctions Freeze the Market.
Every Current buyer in the market place will be very motivated to at least investigate the property being auctioned. The market is frozen. The opportunity to make what may be a good buy, as a practical matter, forces buyers to at least wait until the auction is held.