Real estate auctions offer benefits to both buyers and sellers. Chad Roffers offers tips on how buyer’s agents can help their clients navigate the process smoothly.
July is Inman’s luxury month. Tune in as we investigate the evolving luxury market, explore emerging trends, and speak with top producers and influencers in the ultra-luxury space about how they got to where they are today and the insights they’ve gained along the way. The month will culminate with the live announcement of the expanded Golden I Awards at Luxury Connect in Las Vegas (July 29-30).
Real estate auctions are similar to multiple offer situations, but have several key advantages. First, auctions provide a level playing field for all buyers because everyone has access to the same information and follows the same rules. This transparency ensures that the entire process is fair and impartial.
Additionally, auctions are advantageous for sellers because they can achieve top prices for their properties in less time than traditional sales methods.
As we continue to explore innovative approaches to real estate, luxury auctions have become a powerful tool for revitalizing listings and effectively realizing market value. While there is much discussion about the benefits and immediacy of auctions for sellers, it is also important to highlight the critical role of agents when representing buyers in these high-stakes environments.
Why auctions attract luxury buyers
Auctions provide your buyers with a unique opportunity to begin bidding if they wish. The competitive nature of auctions drives results toward market value. Transparency in the process provides great comfort to buyers by providing full transparency into what other buyers are willing to pay, eliminating the fear of overpaying.
Agent’s Role in Buyer Representation
- Education Buyers: Agents should educate clients on the mechanics and considerations of the auction process. This includes pricing formats, important dates and terms of sale. In a traditional auction, all bids are final, which means any due diligence needs to be done before the auction day. This property will be sold as-is.
- Preparation before auction: Preparation is key to a successful luxury auction. Much like a traditional sale, the agent’s role at an auction should include assisting the buyer in conducting comprehensive due diligence on the property, including inspections, legal checks and valuation appraisals. Ensuring the buyer has the financial means to fulfill the contract is key – most sales close after 30 days without any contingencies.
- Create a bidding strategy: Developing a strategic bidding plan is critical. Agents should work with buyers to set maximum bid amounts, consider bid increments and anticipate competitive behavior. The strategy should balance the desire to acquire the property within the buyer’s budget.
- Auction Navigation: During the auction, the agent acts as the buyer’s representative, ensuring that the buyer remains calm and focused. This involves adjusting strategies on the fly based on the behavior of other bidders. Have a Plan A, a Plan B and a Plan C and work through the bidding process to know what you want to spend and where you are prepared to go if you have to.
- Post-auction guidance: After the auction, the agent’s role will shift to managing the post-auction process, including signing contracts, processing deposits, and coordinating any necessary steps to complete the purchase.
Luxury real estate auctions are a dynamic and effective way to acquire high-end properties. By providing their clients with expert guidance, agents can help buyers secure their dream property with confidence.
In the ever-evolving world of real estate, auctions provide a unique opportunity to demonstrate value to clients, expand an agent’s skillset, and enhance their reputation as a trusted advisor and leader in the luxury real estate market. As auctions continue to grow in popularity, agents who can effectively navigate the process will be able to succeed in the highly competitive luxury market.
Chad Roffers is Chairman of Concierge Auctions, an international luxury real estate company. Follow him Twitter.
