The short answer is no: Selling your house through an auction is usually not a better option than using a realtor, selling for sale by owner (FSBO), or securing competing bids from cash home buyers.
Here's how to decide which option works for your home sale:
🏡 If getting the best price and terms is your priority, a realtor is your best bet. Their negotiation skills and expertise can help you achieve your goals. Concerned about high commissions? Clever Real Estate offers low-commission realtors who provide full services at a fraction of the typical cost, ensuring a cost-effective and comprehensive sale process. Explore your options with Clever Real Estate today!
🚀 If speed and convenience are what you need, consider using services like Clever Offers, which connect you with multiple cash buyers. This option accelerates the selling process and alleviates many of the headaches associated with traditional sales. For added peace of mind, Clever Offers also allows you to consult a trusted local agent to ensure the offers you receive are fair.
🛎️ If your other options are limited, consider selling your house at auction. Auctions can be a viable option if you need to sell quickly and are prepared for the possibility of accepting a lower offer. But they also typically attract bargain hunters, which might not get you the best sale price.
This article delves into the pros and cons of each method, helping you determine the right choice for selling your property.
Selling your house at a real estate auction
The process can take place either online or in-person. The key benefit to selling a house at an auction include:
- You can sell quickly (potentially in 2-4 weeks) compared to listing traditionally, which can take 3-6 months (or longer) from start to finish.
- It's generally a convenient process, as there's no need to stage your home, host showings, or open houses.
- You eliminate the need to negotiate with buyers one-on-one, avoiding uncomfortable situations or conflict.
- You sell your house as-is, so you don't need to make any repairs before closing.
In these auctions, properties can be listed as "with reserve," where a minimum bid is set, or "absolute," where the highest bid wins regardless of amount.
This setup often results in more bidders and potentially higher selling prices in absolute auctions. Before the auction, sellers list their property to give potential buyers a chance to view it in advance. However, all sales are final—buyers must accept the property "as is" without demanding additional work or adjustments.
In addition, some auctions impose certain bidding restrictions, requiring participants to register beforehand. This ensures that only serious bidders partake, which can influence the final sale outcome.
🚫 Why auctions aren't the best choice
Selling your home at auction comes with several risks that are important to consider.
First, the audience at an auction is usually smaller because only buyers who are ready to buy immediately and have the necessary qualifications are allowed to bid. So, your offers may end up being much lower than what you'd expect from an open-market listing, which attracts buyers from all stages.
Also keep in mind that most people think homes sold at auction are in distress, such as in pre-foreclosure or foreclosure, which can further drive offer prices down as buyers may seek a deal on your property.
It's also not cheap to sell at an auction, and the fees might cost more than the agent commissions. Some online estimates peg the costs at around 6-10% of the home's final sale price.
Plus, if your home doesn't sell at the auction, known as a "no-sale" event, it could harm how people view your property's value. Finally, you'll have to pay the auction fees regardless of whether your home sells.
Want a quick, all-cash home sale without the unpredictability of an auction? Fill out the form below to get fair cash offers from top cash home buyers in your area.
Get Cash OffersBest alternatives to selling a house at auction
1. Compare cash offers
If speed and convenience are top priorities for your home sale, consider using a service that connects you with cash buyers to receive multiple competitive offers.
Clever Offers provides this service by helping you compare fair cash offers from local, regional, and national investors. This approach not only speeds up the selling process but also bypasses the typical challenges of traditional sales.
If you're concerned about getting a fair price, Clever Offers includes the option to consult a trusted local agent for a second opinion. This will help you better understand your home's value and how the offers compare.
This dual approach ensures you can sell quickly without compromising on price, making it an optimal choice. Just fill out this short quiz to get competing cash offers today!
2. Use a low commission realtor
This option merges the expertise of traditional agents with the cost-efficiency of lower commissions. Low-commission realtors provide comprehensive services similar to traditional agents but at a reduced cost, which can significantly increase your returns.
For example, Clever Real Estate has pre-negotiated a 1.5% listing fee with its network of agents, far lower than the usual 2.5-3% charged by traditional agents. On a $500,000 home sale, this could save you up to $7,500!
You also get the benefit of having a pro in your corner. They'll help you navigate the complexities of contract details and negotiations, and connect you to a wide network of professionals like lawyers and inspectors, crucial for getting your home ready for sale and drawing in buyers.
For those looking to sell quickly, services like Clever Offers can connect you with cash buyers to speed up the process. However, for the optimal combination of speed, pricing, and service, choosing a low-comission realtor is generally the best strategy. Fill out this short quiz to get matched with a low commission realtor today!
3. Sell without a realtor or "for sale by owner"
If you're looking to sell a house without an agent, you stand to benefit from not having to pay any listing agent commission, saving you thousands. But you'll be in charge of all aspects of selling, including handling all of the paperwork and marketing your home for sale.
Using a flat fee MLS service is a popular marketing boost for FSBO sellers, allowing you to list your property on the MLS for a fixed fee ($99–599). Posting on the MLS essentially blasts your home listing across all of the major real estate websites, including Zillow and Realtor.com, so you're not at a disadvantage compared to agent-listed properties.
However, successfully navigating the FSBO route still requires time, patience, and a certain level of marketing savvy to effectively attract potential buyers.
Pros and cons of selling at auction
Pros
- Cost savings potential
- Simpler sales process
- Faster sale
- No inspections or appraisals
Cons
- No sale guarantee
- Limited exposure
- Small buyer pool
- Potential for lowball bids
- Loss of control
Selling at auction can be appealing due to potential cost savings, a streamlined process, and quicker sales timelines. However, the disadvantages may outweigh these benefits for many sellers.
Auctions can attract fewer and often more frugal buyers, potentially lowering the sale price. The process also offers limited exposure compared to traditional methods, where listings might reach a wider audience and hold the potential to draw multiple bids.
Additionally, the nature of auctions can pressure sellers to make quick decisions, sometimes accepting less favorable terms. Sellers also face upfront costs and have less control over the sale, which can add financial and emotional strain. These factors make it crucial for sellers to weigh the pros and cons carefully before deciding to go with an auction.
