Advantages of Love Auctions vs Traditional Sales Method Comparison
Love Auctions Advantages For Sellers Over Traditional Sales Methods –Love Real Estate Auctions offer many advantages in today’s market. Sellers typically prefer not to wait months or even years to receive an acceptable offer on their property. As a Seller, you ideally want an offer as quickly as possible to turn a page in life and to move on. The Love Auction method of sale is the only suitable choice for that situation. Selling real estate by auction is perfect for Sellers who need to sell quickly and receive market value. The Love Auctions method of marketing is extremely important to establish the market price on unique or large properties with a very small pool of potential Buyers. To put it simply, a real estate auction establishes the true market value of a specific property in a specific marketplace on a specific day. A Love auction is conducted live, typically at the property and simulcasted on the Love Auctions “online bidding platform” which generates Buyers from all over the world.
Love Auctions No Risk Sales Approach -ABSOLUTELY NO RISK!–Before the auction, you will determine a “Reserve Price” (the lowest price you are willing to accept for the property). Therefore, if the highest offer doesn’t reach this price point, you are not obligated to sell the property. Before you determine the reserve price, we review the market comps and recent sales in the area where the property is located and work together with you to determine a satisfactory auction sales price. We then set an auction date to take place in the following 30+/- days.
Love Auctions Nets More Money For Sellers–Fewer Seller sales cost means you will net more money at closing! Love Auctions Seller fees are less than the traditional sales commissions and the total Love Auction process is fast, usually, 60+/- days form from listing to closing, which saves you huge carrying cost. Properties are sold in “as is” condition without contingencies saving a Seller time and even more money.
The Sky Is The Limit-An auction does not have a ceiling when it comes to price. I doubt any auctioneer in World History has ever said: “I’m stopping the bidding, it’s too high.” Auctions allow the market to speak for itself, that’s why world record prices are established at auction not by seller pricing. Conventional listing methods allow the highest possible price to be capped by the Seller´s asking price.
“Benefits of Love Auctions greatly outweigh the mainstream listing method.”
Put The Markets Focus On YOUR Property–A Love Auction showcases your property to the marketplace, providing maximum visibility to the target market. Potential Buyers must decide on your property first as it is date certain and will not be on the market past the auction date. In a conventional sale environment, your property will just be one of many thousands that are minimally advertised in the Multiple Listing Service (MLS). At Love Auctions, we place your auction on every online and in conventional real estate advertising and marketing systems to notify all real estate professionals and Buyers that your property will be sold at auction and invite them to register. We also accept purchase offers prior to the auction and often, properties are sold before the auction date.
Lighting Fast Marketplace–Real estate auctions offer a marketing timeline for a residential property of 30 days. Mainstream listing methods typically take months and even years to sell with plenty of price reductions along the way. The Love Real Estate Auction Platform compress the marketing timeline and notify all potential Buyers that auction day is the day to buy.
“Real Estate Auctions take the control away from the buyer and gives it back to the seller”
Contingencies? We Don’t Want No Stinkin’ Contingencies–Properties offered at auction are sold “as-is”. This means the high bidder cannot back out of the auction purchase contract without risking their escrow money because of inspections or lack of financing. Experts have estimated conventional sales have a fallout rate as high as 50% because of contingencies. This wears on the Seller’s emotions and lengthens the time it will take to sell their property even more.
No Negotiation Zone– The Love Auction method of marketing real estate pits Buyer against Buyer. This allows the Seller to sit back and enjoy the escalation of price since the terms and conditions of the sale were established by the Seller prior to the auction. Conventional sales processes pit the Buyer and Seller against each other causing an anxiety-ridden back and forth, sometimes for days or weeks. Many times, this results in strained relations between the Buyer and Seller even after negotiations have been settled.
True Market Value, NOW!–Markets flow faster and more often than ever before in World History. Real Estate values can drop dramatically over the span of a 6 or 12-month listing agreement. When you are ready to sell, real estate Love Auctions provides the catalyst to determine the true market value of your property within 30+/-. All too often, the conventional listing process starts out with overpricing a property immediately killing the interest of potential and serious Buyers. At a Love Auction, the fair market value of a property is established and goes up from there.
No Cash & Property Needs Work In Order To Maximize The Value…NO PROBLEM!
Love Auctions has established relationships with local companies that will make all the repairs necessary to maximize the sale price of the property and delay payment until the property is sold. If you need pre-sale home improvement services anywhere in DC Metro Market, Love Auctions has the solution. Love Auctions can arrange 100% financing with no cash, credit, or income requirement, and no finance charges or hidden fees. We can get your property refurbish and payment is made from the sale proceeds of the home. Regardless of how long it takes to sell your home, you won’t pay for our home repair services until you sell and close, and there won’t be any finance charges. Services provided include; painting, roofing, flooring, appliances, HVAC, handyman repairs, landscaping, staging, and so much more. Free estimate right up front so you’ll know what it’s going to cost to get your home looking it’s best and ready to sell at its maximum potential price. All work is guaranteed.
“Don´t waste time on the often ineffective conventional listing process. Selling real estate by Love Auctions is the new way to maximize the sale price and get it done fast!”
Timing, It’s Everything– Love Real Estate auctions allow the Seller to control the marketing process on their chosen timeline. Conventional sales methods guarantee that Sellers will play the waiting game. Sellers will wait on Buyers to show interest, wait on them to come see your property, wait on them to make an offer, wait on them to accept your counter offer wait on them to get a home inspection that always cost you money, wait on them to get financing and wait on the option period to expire. But with a Love Auction, you have more control. Love Auctions are the fastest way to seriously move real estate because much of the waiting and the cost of waiting is simply eliminated.
Offers, Let’s Get a Bushel Basket of ‘em- In a conventional listing, you rarely get multiple offers. If you do it is likely a good sign that you are underpriced. Typically, you can expect a painstaking process of waiting for an acceptable offer from a qualified Buyer. Industry experts predict the average listing gets nearly three offers before an acceptable offer is made, but those offers are not at the same time. With a Love Auction, you will get many offers presented on auction day until the highest and best offer is determined by the auctioneer. That’s the only one you wanted when you decided to sell.
Love Auction Calculator
Auction vs Traditional Sales Analysis
Simply input your desired sale price for the property, the mortgage payoff along with your monthly expenses and our Love Auction Calculator will provide 5 different sale scenarios at various price levels. The calculations show you the advantage of a Love Auction over the traditional sales method.
- Desired sale price entered in Scenario #1.
- Scenario #2 is calculated at 97.5% of the desired sale price entered in Scenario #1.
- Scenario #3 is calculated at 95% of the desired sale price entered in Scenario #1.
- Scenario #4 is calculated at 92.5% of the desired sale price entered in Scenario #1.
- Scenario #5 is calculated at 90 % of the desired sale price entered in Scenario #1.
- Monthly expenses for a Traditional Sale is calculated for 120 days (average time from traditional listing start date until closing).
- Monthly expenses for Auctions Sale is calculated for 60 days (average time from auction listing start date until closing).
- Sales commission is calculated at 6% for a Traditional sales fee and 3% for an Auction sales fee.
- Closing cost calculations for an Auction are much less because Buyers are responsible for the closing cost.
- An auction allows a Seller to sell a property for a lower price and net more money than a traditional sale.
CALCULATIONS PROVIDED BY THE LOVE AUCTION CALCULATOR ARE ESTIMATES ONLY, OTHER FACTORS MAY APPLY.
Auction Benefits To The Seller
- Fast sale, reduced cost, higher net proceeds.
- Buyers come prepared to buy
- A quick sale reduces long-term mortgage payments, including taxes & maintenance
- Less Sales commission
- Assurance that property will be sold at true market value
- Exposes the property to many pre-qualified prospects
- Accelerates the sale
- Creates competition among Buyers—auction price can exceed the price of a negotiated sale
- Requires potential Buyers to pre-qualify for financing
- The Seller knows exactly when the property will sell
- Eliminates numerous and unscheduled showings
- Takes the Seller out of the negotiation process
- Ensures an aggressive marketing program that increases interest and visibly
Time Is Money!
Price has little to do with demands, and multiple Buyers don’t often arrive all at once. Any price reduction is proven to undermine the value of your property and frequently cause Buyers to sit back and wait. Research shows the largest factor in determining the price of a property is the number of days your property has been on the market for sale.
Days on the market are your enemy! Like toxic Ultra Violet sun rays on your skin, the longer you are exposed, the more harmful they become. Every day your property is on the market, it depreciates in value driving down the sales price. Days on the market are expensive.
When your property has been on the market for a prolonged period, not only does it suffer from a negative perception, but there is an inherent cost associated with the accumulated days. Each day it goes unsold, you are most likely paying the mortgage along with cost of upkeep, real estate taxes and insurance. These costs add up to nearly 10% of the value of the property on an annual basis. If the property is vacant, the property, it is more likely to deteriorate and drive down the value down even further. Sellers also must consider the time value of money and the loss of opportunity by having funds tied up for a long period of time.
Days On The Market
Cost To Carry
Sellers must recognize that the longer a property goes unsold, the less a Seller will realize from a sale. Selling a property today for $500,000 is better than selling the property a year later for $550,000 when a Seller considers the cost to carry the property, the decrease in the value of money over time and lost opportunity by not being liquid. When real estate is sold at auction, it is FAST with a 30-day process and the closing 30 days later.
With the traditional sales approach, the process goes far beyond 60 days and can linger for months and even years without ever obtaining a single purchase offer. With the traditional sales method, purchase contracts are almost always riddled with contingencies that that result in the termination of nearly 30% of all traditional sales contracts.
Imagine, if you listed your property for sale and obtained a purchase contract in the first 30-60 days and then, weeks later, the contract is terminated due to a contingency. You must start the entire sales process all over after you carried the property for months. What if the “hot” Sellers marker that was in place when you first offered the property for sale has now changed and the market has greatly slowed? You have lost the best opportunity to sell the property at the highest price and you have spent good money month over month to carry it.
An auction eliminates this risk, 95% of auction sales close in 60 days without a single contract contingency because auction properties are only offered for sale in “as is” condition. Should a property linger on the market, Sellers are also diluting the net proceeds due to the cost to carry the property. The average cost to carry a property is nearly 10% of the value of the property annually, considering; mortgage payments, taxes, insurance, utilities, and upkeep.
Cost To Carry A $500,000 Property For 12 Months
*Calculations based on $3500 Monthly Mortage Payment & $1500 Monthly Upkeep (Taxes, Insurance & Maintenance)
Disappearing Equity For A $500,000 Property Over 12 Months
* Value decreases over time. The best time to Auction is in the first 60 days of placing the property on the market.
Best Time To Auction
Auctioning a property when it first comes on the market has tremendous advantages over the traditional sales method. Statistical data clearly indicates that the highest amount of interest in a newly listed property is in first 30 days of when a property is first placed on the market.
An auction of a property in first 30 will often deliver better results for a Seller over the traditional sales method. Auctions do not cap or limit the sale price that the traditional sales method does. The excitement that comes with an auction delivers completive bidding that will drive up the price often beyond the traditional “fixed” asking price determined with the traditional sales method. In addition, auctioned properties are sold in “as is” condition with no contingencies and close in 30+/- days from the auction date. Auctions eliminate the Sellers carrying cost and the entire auction process takes 60 days+/- from the listing date to the closing.
Real Estate Investors, Builders, and Home Flippers fully understand the urgency to sell an investment property quickly. The best way to sell an investment type property is by auction. An auction is fast; 30 days or less from the listing date to the auction sale date.
Properties are sold in “As Is” condition and there are no contingencies. In addition, the Buyer pays most, if not all of the recordation and transfer taxes along with interest on the sale price from the auction date until the closing date, usually a 30-day period.
Every single day that goes by without a sale and a quick closing decreases the profit an investor type property can earn due to the cost to carry the property. Loan fees, real estate taxes, utilities, etc, all add up fast and a property sitting on the market for a long time will turn a profitable deal into a loser for the Investor. Simply stated, the longer an investment property goes unsold, the less profit the investor will earn, if any profit at all!
An Investor, Builders and Home Flippers, can’t afford to wait the lengthy time the traditional sales method takes which allows a Buyer to be in control and to utilize time as a tool to negotiate the sale price down. An auction puts the Seller in control of the sale date, sale price, and the sale terms. An auction offers competitive bidding with no limit to the sale price. An auction puts the Seller in the position to watch the sale price go up, not down and often exceeds “asking price” found in the traditional sales method.
If a property is vacant, Sellers must recognize that the property can and will deteriorate very quickly and drive any potential sale price down. Vacant properties are also prone to break-ins and vandalism. In addition, a small problem such as a leaky toilet in an occupied property can turn into a flood in a vacant property resulting in major damage and cost to repair.
The cost to carry a vacant property while it is deteriorating will drive the potential net proceeds from a sale down 20% or more annually. Vacant properties should be sold quickly to preserve the value.
A Seller cannot ignore the negative effect that time has on the value of money along with the cost of lost opportunity. A great example can be best compared to a stock in a company sold on The New York Stock Exchange. There were people who owned stock in America On Line (AOL) and when the stock crashed years ago, it lost 80% of its value. Some people held it thinking it would rebound, it never did.
Other people sold the AOL stock and invested in a little-known company called Apple and not only made back the money lost on AOL, they realized huge returns with the Apple stock. Real Estate and stocks are both investments and must be looked at in a similar fashion. Often, it is better to sell a property that is not maintaining or increasing its value and reinvest the proceeds into another property that will produce better results. Holding out and waiting for the market to change or for a better price is more often than not, the wrong answer!
Selling real estate can be a difficult process for some Sellers because they may be too emotionally attached to a property, which will cause a Seller to lose out on the best opportunity to sell the property. Human emotion is a factor that can outweigh a prudent business decision. To maximize value, emotion must be separated from the business decision process.