Real Estate Auction and Why It Isn’t a Good Choice

real estate auction

Selling your house on a real estate auction sounds like a great idea to get the most money for your property. Auctions on the TV seem great, as you have a large crowd dramatically bidding until the item’s price goes up to incredible levels. In real life, however, a real estate auction is not as simple.

In theory, if you want to make a quick cash and to get rid of your unwanted property, selling your house on a real estate auction sounds great. The buyers are presented with a time limit which makes them make offers that later may even seem irrationally high. After this, the seller will walk home with cash in their pockets and a smile on their faces. However, unless really necessary or if the property is extremely attractive, selling your house on a real estate auction isn’t really a great choice. Why is that?


Auctions aren’t free of charge. They will usually take 10% of a final purchase to cover their services. This means that you may end up with less than you desired. At the same time, if they are charging buyers these 10%, the buyers may bid for less. This way you will be left with less money than you hoped for. At the same time, this 10% fee is way higher than the 6% fee that you would have if you decided to sell with the agent. And if you decide to sell your house to a real estate investor, there won’t even be a fee!

You Will Have to Work Alone

If you can’t determine the beginning price for the sale of your property, you have probably thought about asking your real estate agent to help you with your real estate auction. In the end, the real estate agent might give you some useful advice, determine the value of your home and help you guide you through the process.

Well, we have bad news for you. Real estate agents most likely won’t work with people who are looking to sell their house on a real estate auction. This is because they won’t get their commission through the sale of your house and this makes auctions unprofitable for them. This means that you will, most likely, have to work alone – or with the help of the auction house, and most of them tend to not care too much about the sellers.

Buyers Are Different

Real estate auctions tend to attract the different kind of buyers than traditional listings. When it comes to traditional buyers, they will have the time to inspect the property and to see if everything is according to their needs and wants. Sure, this comes with the risk as well, as most of traditional buyers aren’t pre-approved for financing, which isn’t the case in auctions. However, this is where the buyer’s advantages end. People who are looking to buy property on auction have limited time for every stage of the decision-making process. This means that they tend to be value-oriented, and that it’s hard to predict who – if anyone – would want to buy your property and for which amount.

Competitive Market

You may think that competitive market is a good thing. If there is a competition, people will fight to win your house, right…? Wrong. Auctions tend to cover multiple properties at once. This means that buyers can easily make comparisons and they will completely dismiss the houses that they don’t have any interest in. And with the limited time, it is hard to win someone over. Especially as buyers at real estate auctions are usually looking for an investment property. All of this may result in your house either not being sold, or selling at the lowest possible price.

Small Number of Potential Buyers

When you list your property on the MLS, anyone can view and buy it. However, real estate auctions aren’t as advertised as traditional listings – and even when they are, the promotional services are extremely expensive. Not only that, but most ‘ordinary’ buyers can’t even get into the auctions! Many states require that the buyers have to be registered as formal direct buyers. A big number of buyers don’t like this process, so they will rather decide not to be a part of the real estate auction at all. Not only that, but the buyers are expected to be physically present at the time of the real estate auction. In other words, if the weather is bad, or if the auction is held during the office hours, many people that are interested in your property won’t show up. This is why it’s better to contact a real estate investor you trust directly and to make a direct sale of your house, avoiding the costs of the auction.

No Guarantee

No matter the promises people from the auction house may give you, there is no guarantee that your property will sell. In fact, most properties sell for less than they could when being sold on auctions, if they sell at all. Sure, some people make a quick sale of their house and they earn a lot, but you can never be sure that everything will go according to your plans.

What’s even worse is that a lot of auction houses have contracts that forbid you from changing the seller as they require sole selling rights not just during the auction, but for some time afterwards as well. This means that not only you may not sell your house at that one auction, but also that you may not be able to try to sell it any other way for a while!

Do You Have an Alternative?

Yes, you have! If you want to make a quick sale of your house, but want to avoid the uncertainties of the auctions, you can always decide to sell your house to the real estate investor. The final outcome will be similar – you will get rid of your unwanted property fast, and you will be paid in cash. The difference is that the small amount of people can sell their houses for a huge price at the auction, while others end up with less than they expected. If you are not willing to take that risk, contact some direct buyer such as Sparks Property Investors LLC to see how much you can get for the sale of your property.

Another good thing that comes with selling your house directly to a real estate investor is that there are no commission fees and any other additional expenses that you didn’t plan on having. How much you are offered, that is the amount of cash you will get. Also, you can close the sale as fast as if you were to sell your house on an auction – if not even faster, as most direct buyers can close in a week.

If you are interested in making a quick sale of your Milwaukee, Wisconsin property, but aren’t willing to risk at real estate auction, contact Sparks Property Investors LLC by filling up this form or at (262) 288-0580 to discuss your options.

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