Buying Commercial Real Estate Through Auctions

Another technique that I have used to market a great deal of land is a public auction! A public auction can be an excellent tool for selling a lot of land very quickly and very successfully, if it is structured correctly! I’ve sold 46 lots to different individuals in one day, using an auction! Most people think that auctions are used in distressed situations and sometimes that’s true. However, they can be used for any sale. Auctions can be conducted so that the sales prices are “absolute”, which means that any bid is accepted. Or the seller can determine the minimum bid that he would accept and inform the auctioneer, and the auction will be stopped if bids go below that figure. With an “absolute” auction, the seller is really rolling the dice but with an established minimum bid auction, there is protection. Absolute auctions are normally advertised as such but the established minimum bid auctions are not.

Since an absolute auction is an auction where there is no minimum bid established, the property is sold at any price! This is really risky and in my opinion, is not necessary. The alternative to the absolute auction is an auction where, although it may not be advertised, a minimum bid has been established. If, in the course of the bidding, the bids get too low the auctioneer stops the bidding. This way you have a minimum price set that you will accept for each lot and no lower. I’ve conducted two large auctions and they definitely are marketing techniques. They can be excellent means of selling a lot of property in a short period of time. As I have said, I sold 46 lots in one day with an auction AND we had the closings the same day!! Which I will explain later. Should you decide to use an auction there are a couple of things you need to consider. First of all, don’t let the auction company talk you into putting all your lots up for “absolute” auction. They may try to get you to do this because they say “it will bring more people out to the auction!” Don’t trust them and don’t put all your lots up for absolute auction!

Let’s suppose that you have 33 lots ready to market. You could advertised 10 lots at “absolute auction”, and then have a minimum bid established for the remaining 23 lots. Or you could simply advertise 33 lots for sale at auction. People have a real curiosity about auctions and will come out; you just have to have it set up properly. As I mentioned, the auction company may try to get you to list all your lots at absolute auction. This way they know that everything will sell and they will make more commission.

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