The first time I used open bidding to sell a home was in 2012:
BI picked it up, and here is their blow-by-blow account:
https://www.businessinsider.com/southern-california-home-auction-2012-11
Some may wonder is there is a separate auctioneer license. In California there is not an auctioneer license, but a $30,000 bond is required, which I filed years ago.
How does an auction process work when the buyers are not “all cash”? If bidders have financing contingencies then the property has to appraise or their offer could fail. I know an experienced broker like you would already have a very good idea of what the property would be able to appraise for, but how do you handle that situation if it comes up in an auction context?
I remember watching this 9 years ago. I said to myself “I like this dude. He has huevos.” Get good help.
How does an auction process work when the buyers are not “all cash”? If bidders have financing contingencies then the property has to appraise or their offer could fail. I know an experienced broker like you would already have a very good idea of what the property would be able to appraise for, but how do you handle that situation if it comes up in an auction context?
This is where we have work to do.
If buyers can prove that they are officially pre-approved, it is the same as cash, at least to the sellers.
But we need to bust up the other old wives’ tale with realtors – that cash is better than financed.
If a financed buyer is willing to waive their appraisal contingency, which at least have been lately, then what’s the difference?
Agents will scream, “Oh Jim, something could always happen with financing.” But something can happen with cash purchasers and they fall out of escrow too.
One thing that is as important as anything else in the decision-making process is how good is the buyer-agent? Can they get buyers to the finish line? When deals blow up, it’s usually because the buyer-agent is weak and can’t find a solution, or can’t sell it. But you don’t even see that question on the spread sheet.
If all of the bidders are all cash, like they were last weekend, or they are all financed like they were in my 2012 video, then it’s even. It gets tricky when when you have a mix of both. As leader, I would insist that all the financed bidders waive their appraisal contingency to participate. Then do the auction, and then take a hard look at the winner, and their agent, when committing.
The auction is only one step of the process – it is the fair way to select the winner by giving every buyer a chance to purchase the home (which doesn’t happen today).
Signing up the winner, and getting them to the finish line are two more critical steps along the way.
When auctions of big, multi-million-dollar estates have been done around here, they either produce a home inspection and give a copy to all buyers, or provide ample time for buyers to conduct their own home inspection prior to the auction date.
If/when auctions go mainstream, the home inspections will all be done in advance, and homes will then be sold without contingencies.
Thanks Anon!