4 Reasons Why Auction is the Right Fit
Ty Patton | June 20, 2019
There are numerous property types that excel at auction. But one property type in particular that shines at auction time and time again is a home with accompanying acreage.
Here are 4 compelling reasons why auction is the right fit:
Demand for homes with acreage is strong.
That is, the number of buyers vastly outnumbers the number of properties available. Auction offers a chance to leverage that demand in a competitive, but transparent, process that helps achieve top dollar.
Rural properties offer pricing challenges that make the traditional sales method a tough fit.
Each rural home has unique aspects and features. That can make finding accurate comps—and in turn deciding on an appropriate pricing strategy—a shot in the dark. And there are serious repercussions when a property is positioned incorrectly in the market: if the property is priced too low, the property sells quickly, but the seller has likely left money on the table.
Alternatively, if a property is priced too high, the property sits on the market without action, begins to accumulate days on the market, and runs the risk of becoming stigmatized to buyers. Auction offers an avenue to avoid the risk of the traditional market by putting the impetus on the buyers. Competition will determine exactly where the top of the market is.
Rural properties offer even more places where an inspection or appraisal can derail a transaction.
In addition to all of the normal challenges, rural properties add countless additional new items to the mix. Everything from lagoon or septic systems, to wiring in barns or outbuildings, to wells, to questions about access to rural water can become an issue. Likewise, rural properties often fail to fit into the neat box in which many lender and underwriters try to place homes. The potential income from a 10 acres hay field, for instance, may cause an underwriter to reject the property because it is “income producing.”
At auction, however, properties are offered “as is” with no contingencies for inspections, financing, or appraisals. Buyers are free to undertake any and all due diligence that they would like, but the sellers is not responsible—and the contract is not contingent—on the various hurdles that a traditional property must face.
Rural properties offer an intangible component that is difficult to measure, assess, or value.
Whether it is the solitude and tranquility that a particular piece of ground offers, the chance to grow your own vegetables or raise your own livestock, the opportunity to hunt or fish, the ability to raise 4-H projects, or any of the other countless things a rural property offers, there are lifestyle components to rural properties that cannot be found in more urban homes. These aspect of owning a rural property help drive competition because they are the type of things worth competing for.
Auction offers an opportunity to showcase the romance of owning a rural property during the marketing campaign leading up the auction. And, on auction day, the buyers have the ability to truly weigh the lifestyle aspect of the purchase as they compete for the property.
Auction offers a unique marketing and selling process that is, in many ways, tailor-made for rural properties. The process enables buyers and sellers to avoid the pitfalls that can often sink a traditional transaction; transparent and competitive bidding offers an avenue to find the true market value; and there is simply no better method to ensure that every aspect of a property—from the tangible to the intangible—is properly spotlighted.