As if real estate needed more hurdles, a tough credit market has made a monster of the already lengthy and sometimes nerve-wracking financing subject. On a good day, the process can delay or derail a deal, to the agony of the seller, the buyer and their agents.
While solid traditional and alternative financing options remain, savvy agents can widen their marketing scope to skip the financing concern altogether.
1. Market to Finance-Ready Buyers
Buyers who are currently researching real estate, with financing and cash already in hand, are your ultimate audience.
Australians and others around the world have figured that to maximize asset value and save valuable time and resources, they must cut to the chase by focusing their marketing on buyers who are ready to execute.
The National Association of REALTORS® (NAR) forecasts that within four years, one in every five properties in the United States will be sold at auction.
Last year in the U.S., over 58 billion dollars of real property exchanged hands at auction, with 52 percent being non-distressed, luxury homes and estates. Many of those are multi-million dollar deals that closed in as little as 30 days. These numbers can skyrocket as new, Web-based platforms enable mass participation by REALTORS® and consumers alike.
According to myrpdata.com, for the week ending May 27, 2012, between 28 percent and 55 percent of scheduled auctions in Australia cleared. Melbourne saw a 55.20 percent clearance rate, with the majority of the properties selling ahead (9.22%) or during the auction (43.35%). Another 2.58 percent cleared after the auction expiry date. Sydney had a 51.30 percent clearance rate, and Canberra 44.40 percent.
2. Decide on a Strategy and Discuss It with Your Seller
Buyers at auctions are significantly more likely to go through with a deal, mainly because they are funded and ready to engage.
The key is to decide on a strategy that can fetch your seller top dollar on their home. Here are some of the most popular ones:
• A ‘Best Offer’ strategy allows you to set your price but be willing to accept offers that could come in higher or lower. As in traditional real estate sales, the market will dictate the direction. This will allow extra security in setting your final price, but will allow you to gauge the market as a whole by fielding direct offers as well.
• The ‘Own-It-Now’ approach is very popular. It gives buyers the opportunity to purchase the property at a published price, which ends the auction irrespective of the published auction expiry date. This strategy gives a decided buyer, or a REALTOR® and their client an edge, by allowing them to lock in a deal with a click.
• ‘Reserve’ auctions allow you to set a hidden price target below which you are not legally obliged to sell, if not reached by the auction expiry date. This strategy is used by REALTORS® who like to approach the market with a lower, more attractive price, to attract more potential buyers and ignite a bidding race. Lower does not mean cheap, but rather a price point with the potential to attract multiple buyers and help maximize the value of the home, and sell it more quickly.
• ‘No Reserve’ is also referred to as an English auction. It allows you to set a starting price, at or above which the property is sold to the highest bidder, by the auction expiry date. We frequently see bidder excitement created by the ‘no reserve’ set up result in a higher purchase price than the ‘reserve’ auction approach.
3. Determine Where to List the Property
Some providers auction properties through local events where buyers gather to place their bids. The winner is declared right there and then, and the auction on the property is ended. Others offer the same service but only online, yet others offer a combination.
While each has its advantages, the majority of consumers are going online for their real estate research and buying in general. It’s the way of the future and allows you to reach more buyers including those from out of state and other countries. More and more international buyers are investing in U.S. real estate, which makes the online option a more logical, simpler option.
Early and typical auction models also impose registration or participation fees, penalties and buyer premiums that can reach up to 10 percent of the value of the transaction.
The future does away with such prohibitive fees, including buyer premiums. This shift, powered by highly intuitive technologies are set to attract mass participation, revolutionize real estate buying and selling, and put the traditional sales process in North America on the fast track.
Identify and insist on an online marketplace that enables you to reap the benefits of selling your property online, at no cost to you or to the buyer, whatsoever.
To learn more about how to engage with finance ready buyers completely free of charge, read about the various live offer and auction strategies offered on ListedBy.com.
Roger Noujeim is vice president of marketing at ListedBy.com, an online real estate marketplace and social network with live bidding auction and ‘Submit an Offer’ functionality.