What do you think when you hear the word “auction?”

Before we continue, let’s talk about how to contact Barry Huber at 615-756-8717. Principal auctioneer license #7337. See our current auction list here for an upcoming schedule. Barry and his wife Cheryl lead the Homes By Huber team powered by simpliHOM.

Barry Huber and the team of Homes By Huber serve as both a realtor and an auctioneer. While it is important to understand what an auction is and how to use them, there are common facts and misconceptions about auctions that we work to help our clients understand. First, let’s go over the facts about why auctions can be a benefit to you.

1. The client has nothing out of pocket. An auction is much different than a traditional real estate transaction and may limit or eliminate your out of pocket fees. Let’s talk about how this can benefit you.
2. Faster closing and payment times. The typical auction, while there is no guarantee, has a closing period and payment period of four weeks from the auction to closing process. This means you get paid faster when you sell.
3. The net is higher than the open market. When you have an auction, there are different types which include absolute (the auction sells no matter the price) and reserve (a minimum price is determined by the seller and not disclosed until there is a potential winning bid). This can result in a flexible sale price and often bring a higher value than a traditional market value sale.
4. There are no showings, inspections or appraisals and a flexible occupancy and exit date which can be negotiated between the seller and buyer.
5. An auction is not for everyone, but can have serious advantages. An additional auction advantage is the ability to include personal property as a separate auction including belongings, outbuildings or accessories, additional land tracts and more.
6. A charitable auction is not often a home or property, but rather goods and services which are auctioned off to benefit an organization such as a school, church or other non-profit fundraiser or benefit. Homes By Huber has participated in many charitable auctions and benefits and these items are often sold by silent auction on site or live auction at the event.

Here are some common myths about auctions for residential property:

1. Auctions are only for distressed properties: NO. A common misconception is that only foreclosed or distressed properties are auctioned. In reality, many sellers, including those with premium properties, use auctions to attract competitive bids and expedite sales.
2. Auctions result in lower prices: NOT ALWAYS AT ALL. Some believe auctions result in below-market deals. However, auctions often attract serious buyers and can drive prices up through competitive bidding, sometimes exceeding the property’s market value.
3. Auctions are only for experienced buyers: NO AUCTIONS ARE FOR ANYONE! Many think auctions are only for seasoned investors. However, auctions are open to all buyers, including first-time homebuyers. The process may even simplify purchasing by avoiding prolonged negotiations.
4. You can’t inspect auction properties: WE OFFER ON SITE PREVIEWS AT EVERY AUCTION. It’s often thought that auction properties can’t be inspected beforehand. However, most auctions allow property inspections before bidding, and auction terms are generally clear about the property’s condition.
5. Auction buyers must pay cash: ACTUALLY, WE ASK FOR PRE-REGISTRATION AND QUALIFICATION. While cash buyers are common, many auctions allow financing, especially for residential properties. However, pre-qualification for a loan is usually required.
6. Auctions are complicated and risky: THIS IS WHY WE ARE HERE TO HELP. The perception is that auction processes are complex and fraught with legal risks. In reality, reputable auction companies provide clear terms and conditions, making the process transparent.

These myths often deter potential buyers from participating in auctions, but understanding the facts can open new opportunities in the real estate market.

Different types of auctions available to you. The following descriptions for auction types are from real estate information found online and not necessarily connected to any Homes By Huber Auction in particular. Homes By Huber is not responsible for off-site content.

1. Absolute Auction

• Description: The property is sold to the highest bidder, regardless of price. There is no minimum bid or reserve price.
• Best For: Sellers looking for a quick sale without concern for setting a minimum price.
• Risk: The property could sell for less than expected, but it can attract more bidders due to the guarantee of a sale.

2. Reserve Auction (Minimum Bid Auction)

• Description: The seller sets a minimum acceptable price (the reserve), and the property is not sold unless bids reach or exceed that amount.
• Best For: Sellers who want to ensure they receive at least a certain amount for the property.
• Risk: If bids don’t meet the reserve price, the property may not sell.

3. Sealed Bid Auction

• Description: Bidders submit confidential bids without knowing what others have offered. The highest bid is revealed after the bidding period ends.
• Best For: Properties that may attract sophisticated buyers or for ensuring a fair process without direct competition influencing bids.
• Risk: Buyers may either overbid due to lack of information or underbid and lose the auction.

4. Dutch Auction

• Description: The auctioneer starts at a high price and gradually lowers it until a bidder accepts the current price.
• Best For: Selling multiple units of the same item (e.g., land parcels) or when the seller wants to control the pricing pace.
• Risk: The property may sell for less than expected if bidders wait too long to act.

5. English Auction (Open Ascending Auction)

• Description: The most common type of auction, where bidders openly bid against each other, with each new bid being higher than the previous one. The property goes to the highest bidder.
• Best For: Sellers who want to encourage competitive bidding and potentially drive up the price.
• Risk: There is less risk in this type of auction since prices usually rise, but it requires strong demand to work well.

6. Multi-Parcel Auction

• Description: In this format, multiple properties or parcels of land are auctioned at the same time, with bidders able to bid on individual parcels or combinations of parcels.
• Best For: Large properties or land that can be divided into smaller parcels to attract different types of buyers.
• Risk: The total sale amount may vary depending on the bidding strategy and interest in specific parcels.

7. Online Auction

• Description: Conducted entirely over the internet, allowing bidders to participate remotely. It can follow any of the auction formats mentioned above.
• Best For: Properties where buyers may be spread out geographically, or when scheduling a live auction is impractical.
• Risk: There may be less competition in some cases if potential buyers are unfamiliar with online auctions, though convenience can increase bidder participation.

8. Auction with a Buyer’s Premium

• Description: The winning bidder must pay an additional percentage of the bid amount, which goes to the auctioneer or auction company.
• Best For: Auction companies looking to cover costs and increase profit while keeping upfront costs lower for the seller.
• Risk: Buyers may factor in the premium and lower their bids, but this is generally well-understood in the auction industry.

Each auction type offers different advantages depending on the goals of the seller, the nature of the property, and the market conditions.