Real Estate Auction Options Principal Gary Gilbert discusses luxury real estate auctions for both sellers and purchasers.

Cancelling an Absolute Luxury Home Auction a Few Days Prior? Give the Auction a Chance to Work.

By Gary Gilbert on
Gary Gilbert
I have been involved in multi-millions of dollars worth of luxury real estate au
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Jul 15 in Luxury Home Auction

Today, one of the disturbing new trends in our industry I want to share with all of you involves that of what else?  You guessed it, the bogus absolute auction.  Of course since we focus on the luxury home auction world here, I wanted to share with you some color on the latest bait and switch being used out there.  If you are a luxury home owner or the agent of a luxury home owner considering a non-distressed event, please take note and don't fall victim to this ploy.

Here is how one of the latest deceptive models out there is structured:  The luxury real estate auction company tells the potential seller that they will advertise the auction as "absolute" or "selling without reserve" in order to create maximum interest and hopefully maximum number of registered bidders.  The seller is told that they and the auction firm will gauge the interest level a few days prior to the auction based on whether or not there are opening bids, if so the amount of those opening bids, and the financial status of the interested bidders, if any, at this point.  If there are no opening bids, the opening bids are low, or there are no bidders at this point, the auction is cancelled and the results are either spun in the media (overwhelming interest requires auction to be postponed or there is a sale pending) or simply not mentioned anywhere in the media.

So, who are the losers in this scenario? First, the seller, who has spent $50k plus upfront, in advance to advertise and market the auction is out that money and right back where they started from with the home still for sale.  In addition, now that the auction has been cancelled, potential future buyers will question what is wrong with the property and will discount that unknown factor into what they may be wiling to pay for the home in a traditional sale.  Second, the potential buyers who spent time and money conducting their due diligence prior to the auction by traveling to tour the home, etc. only to have the rug pulled out from under them.

I've been doing this for a long time and know that most of the best buyer/bidder candidates surface the day before or even the day of the auction.  These are private, affluent buyers who prefer to keep a low profile.  Why on earth would someone cancel an auction a few days prior without giving the auction a chance to work, especially the day prior and of the event?  By cancelling the auction, one is not giving the auction any chance at all to work.

Imagine that you have traveled a week or so prior to tour the home being offered and then found out after you had already confirmed a second trip to attend the auction itself that had been cancelled.  How would you feel?

Let's don't let this happen to you or you and your client.  Reach out anytime to discuss this very important topic or anything else you may want to discuss regarding high-end real estate auctions.




Tags: luxury real estate auction companies, absolute auctions, absolute luxury home auctions


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