Auctions are an excellent way to sell a range of property, from real estate, to unwanted business equipment to collectibles. Finding an auctioneer who specializes in your property, and who has the right blend of experience and training can help make your sale more rewarding.
Whether your looking to sell your home, vehicle or excess inventory from your business, you should consider selling your property at an auction. Auctions offer a fast-paced way in determining what price the market bring for your property. With the combination of solid pre-sale marketing and the auctioneer’s ear-catching chant, you could have enthusiastic, attentive buyers competing to purchase your property. Often, items sell for far more than their estimated value.
In comparison, placing an ad in the classified or posting a “For Sale By Owner” sign may garner only a lukewarm response or “tire kickers” just looking. It may take months before you finally sell your property, and even then you may have to accept a price much lower than you had hoped.
But holding an auction takes a bit more time than simply contacting an auctioneer and collecting the cash after the sale. For you, it means determining if your property is right for auction and finding and contracting with an auctioneer that meets your needs. For the auctioneer, it means marketing your merchandise, preparing and conducting the sale, and tallying and dividing the proceeds from that sale. What follows is a brief look at the steps you need to take to determine which auctioneer best meets your needs.
Choosing the right auctioneer
If your property is right for auction, then you’re ready to begin looking for an auctioneer. The easiest way to find an auctioneer in Massachusetts is to search the Massachusetts Auctioneers Association’s on-line database or contact the MAA for a MAA Members Directory Book.
You can also find auctioneers by looking in the Yellow Pages under “auctioneer.” Or you can locate an auctioneer by looking for auction ads in the newspaper.
Finding an auctioneer is easy. Hiring the right auctioneer takes a little more effort. You will want to weigh several factors carefully before signing a contract. Price shouldn’t be the only determining factor in making your decision. You should also consider:
- Auctioneer Specialty. Many auctioneers specialize in only a few types of auctions. They will best know the market; the value of your property and how to attract the buyers most interested in your property.
- Experience. Auctioneers can conduct anywhere from a few dozen or over 100 auctions in a year. Seasoned auctioneers know the market and know how to get the best price for your property.
- Referrals. Auctioneers have plenty of success stories to share. But don’t just take their word for it. Ask former clients for their thoughts on their sales.
- Licensing. Many states require auctioneers meet professional licensing requirements. Municipalities may also require auctioneers have permits or licenses.
- Professional Affiliation. Members of the National Auctioneers Association and state auctioneer associations keep abreast of their respective specialties, regulatory requirements and changes in your market. More importantly, NAA members are governed by a Code of Ethics, which ensures professionalism and protects both you and the buyer.
- Reputation. While less tangible, an auctioneer’s reputation is crucial to the success of an auction. This is a blend of experience and character. An auctioneer who is trusted and respected in their community will more likely attract a devoted group of buyers willing to attend and bid at their auction. Talk to former clients and people who attend auctions frequently.
If in doubt, ask questions. What type of auction is best for my property? What types of services do you offer? Where will the auction be held? How soon will I receive the proceeds from the sale? Learn what you can now to avoid any misunderstandings later.
The auctioneer will have some questions for you as well. How soon must your property be sold? Why are you selling now? Have you tried selling before through other methods? While you’re trying to choose an auctioneer, the auctioneer will be determining if they can meet your needs and get the best price for your property.
Once you’ve made your choice in an auctioneer and determined the services you want, you’ll cement the partnership by signing a contract. The contract will spell out your responsibilities, the responsibilities of the auctioneer, commissions, expenses you’ll pay and when you’ll receive the proceeds from the sale. Read the contract carefully and make sure you know the details of the contract before you sign. If you’re unsure before you sign, ask questions.
What’s it worth?
Auctioneers boast they can sell just about anything for a tidy profit. After researching your property, an experienced auctioneer can determine its value, but it doesn’t hurt to have your own ideas about your property’s value.
So how much is your property worth? It depends upon the market for your particular piece of property. Some commodities, like real estate, depend largely upon the geographical area and sale prices for similar properties. Other, more specialized commodities, such as manufacturing equipment or heavy equipment, will attract smaller groups of buyers across a much larger area.
It also depends upon the condition of your property. Knowing the age of your property, the manufacturer, the types and extent of repairs and keeping records of regular maintenance may help determine value.
It doesn’t hurt to conduct your own research by visiting stores and consignment shops, reading classified ads or by checking web sites for property similar to yours.
While you are conducting your research, you must make sure that you own the property. This is particularly true of real estate. Without a deed or title to your property, it will be very difficult to sell your property at auction.
What to expect
Conducting an auction requires far more than placing items on the auction block and collecting money. Before you finalize an agreement with an auctioneer, what can you expect before and on auction day? Before, during and after the sale, your auctioneer will be juggling many duties:
Your auctioneer will need to generate interest in your auction, and the best way to get the word out is advertising. Depending on what you’re trying to sell, the auctioneer could use a blend of newspaper ads, radio spots, ads in newsletters and specialty magazines, custom brochures, direct mail pieces and sales bills.
The Internet now plays a significant role in marketing upcoming auctions. Many auctioneers post details about upcoming auctions on their web sites, or they could use auction lists on other auction sites, such as the Massachusetts or National Auctioneers Association’s Find an Auction function.
Finally, some sophisticated auctioneers develop email lists of registered buyers who are interested in specific items that are offered for auction. They may use that list to generate interest in your auction.
Type of sale
There’s more than one type of auction, but which one is best for your property?
Absolute auctions set no minimum amount for a piece of property, despite its appraised value. For example, if a car is appraised at $600 but only garners a high bid of $550, the high bidder walks away with a bargain. Likewise if the car sells for $650 or more, you benefit from the greatest advantage of an auction—the market determines the value.
Reserve auctions allow you to set a minimum amount you’re willing to accept for your property. That amount will not be disclosed prior to or during the auction. You have the right to accept or reject any bids at a reserve auction, and you can remove the property from consideration before the auction is completed.
There are a few other details your auctioneer will handle, such as absentee bids or proxy bidding. Also, some auctioneers use the Internet to accept bids, through email prior to or during the auction, or by streaming video with the ability to accept bids in real time.
Preparing items for sale. After inspecting and appraising your property, your auctioneer may suggest minor repairs or maintenance be made to increase the value of your property. For example, if you’re selling a house at auction, painting the exterior or cleaning the lawn may make it more saleable. It could be your responsibility to complete these tasks or the auctioneer may do them on your behalf.
Your auctioneer will be plan and execute your auction from start to finish. This includes:
- Setting up and cleaning up the facility
- Organizing and displaying your property: The auctioneer and their staff will catalog your property, tag it with lot numbers and organize it for display. In some cases, such as real estate auctions, they will allow buyers to look at the property a week in advance. At the very least, buyers can view the property on the day of the auction.
- Answering questions about your property, terms of the auction and the auction.
- Registering bidders. This includes taking basic information from individuals wanting to bid on your property: name, address, phone number and drivers license number.
- Calling bids
- Collecting money from winning bidders
Money collected at the day of the auction is usually deposited into an escrow account, a third-party bank account that holds the proceeds until the auctioneer can tally receipts and expenses.
Before you collect your share of the sale, the auctioneer’s commission and expenses must be deducted. Auctioneers are usually paid on commission, a percentage of the gross proceeds from the sale. Some auctioneers are turning to charging a buyer’s premium to collect their fee. A buyer’s premium is a percentage added on to the final price of the item. You’ll need to discuss how your auctioneer will be compensated before you contract with them
Beyond the auctioneer’s commission, your auctioneer will have other expenses they’ve taken on your behalf. For example, if they’ve placed an classified ad in the local newspaper for your auction, you can expect to pay for that ad. Or they may have rentals, catering, set up and auctioneer staff. Those charges may also be deducted from the gross proceeds from the sale. Or they may charge a buyer’s premium and use that to pay the expenses.
Avoid unpleasant surprises by asking the auctioneer about their commission, what services they’ll provide and what additional expenses might be involved in the sale. Some auctioneers will provide a budget or a cost estimate for your sale.
Courtesy of : The National Auctioneers Association