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

Advertise a Luxury Home Without Reserve, then Cancel the Auction. Really? Some Clients Just Don't Listen.

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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Jun 08 in Luxury Home Auction

How many times have I shared with you all the subject of the green apple auction?  Many, because it is a subject that requires much awareness.  The buzz word green apple auction refers to an auction that is supposed to be absolute (sells to the highest bidder regardless of price) but instead is agreed upon in advance, usually when the initial agreement to auction is signed, that if the price is not acceptable to the seller, the auction will be cancelled.  By using the absolute come on, buyers are more motivated to engage in the process of purchasing something at a luxury home auction because they think that if they are the high bidder, they will be the new owners.  Sadly, too often, the high end real estate auction company is playing games only to serve their best interest with the high bidder left with nothing and the sellers high and dry.

I have noticed lately that instead of using the word absolute, questionable firms have started using the words selling without reserve.  Don't be fooled- the two mean the same thing.  There is actually an interesting article in the latest Auctioneer Magazine discussing this topic.  Consider it a big red flag if a firm is recommending that you or you and your client conduct an auction without reserve that can be cancelled.  It opens up all kind of negative possibilities like litigation, something no one want to be a part of.  Let's be smart, work together and get ahead of this landmine before it's too late.

Now, let's get back to the clients I recently met with who it looks like are going to fall victim to this ploy.  When we first met, they were dead set on conducting an unpublished reserve auction.  They were 100% against a legitimate absolute auction.  Based on my expertise in the field, I tried to convince them that it was in their best interest to conduct a published minimum reserve auction.  Sadly, I recently learned that they have decided to use a questionable firm and that they will advertise it, yes you guessed it, without reserve.  Why would anyone do this?  It is an easy sell for a firm because the seller feels a sense of security, although false in nature, with this method of sale.

I have seen it play out time and time again and am confident as to what will happen with this seller.  The home will achieve a bid that is nowhere near the sellers' goal, the seller will be out the $50,000 or so they spent for advertising and marketing upfront in advance with a home still for sale.  The auction company will spin things by saying that the home either pre-sold or that post-sale negotiations are going on to save face.  Bottom line- the sellers are right back where they started from and the auction company moves on to the next victim.

Let's don't let this happen to you are to your and your client.  Reach out to me anytime to discuss this topic or with any other questions you may have regarding luxury real estate auctions.  My advice is complimentary and my experience priceless.

Gary

Tags: luxury home auctioneer, luxury house auction, high end house auction, luxury home auction companies, high end home auction, luxury real estate auction company, luxury home auction

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