It’s no secret that the housing market is currently in a downward slump that has seen home prices hit a record seven year low.  The surplus of homes for sale dramatically outpaces the number of actual sales, many of which are being sold at some of the lowest prices seen in years.  Homeowners seeking to sell off their homes are often finding themselves having to sell for a drastically less sum than what they may have initially invested when they purchased the home. To circumvent the current home slump crisis, homeowners are turning to alternative methods, namely auctioning.  This new tactic is quickly becoming a popular substitute for individuals and families who are having difficulty selling off their properties through traditional means.  Home auctioning has increased over thirty percent since 2003 and account for just over $15 billion in annual sales.  Although auctioning may be a worthwhile alternative, it is imperative to consider a few key points before dipping your toes. 

1) Start off by determining your unique needs.  Putting your home up for auction and having it sold is a process that can take less than a month.  If it’s been sitting on the market for a lengthy period of time with no foreseeable success, you may want to pursue this method in order to expedite the process and move on quickly. However, if you’ve already decided that your home will sell at a fixed price you’ve predetermined, an auction may not grant you that specific price.  A home for auction sells at what the value of the home is on the exact day it is sold.  Therefore, you may end up receiving less than what you originally anticipated.  

2) Find a reputable auction house.  Seize the massive resources of the Internet and thoroughly research an auction house before taking any further steps.  A superb resource to use is the National Auctioneers Association (http://www.auctioneers.org), a website run by a trade group for qualified auction houses.  Ensure your potential auctioneer of choice has the Certified Auctioneers Institute designation which is given to individuals who’ve established themselves with at least two years of related auctioning experience and are continuing their education. Make sure you ask your prospective auctioneer any and all of the pertinent questions regarding your needs and the history regarding auctions in the area where your home will be auctioned such as the average selling prices, number of auctions conducted, etc.  It’s also a good idea to ask for references, that way you can gain valuable opinions that will further aid you in determining if the auctioneer will garner you results. 

3) Be aware of expenditures.  Most of, if not all auction houses will charge you a variable seller’s fee up to eight percent of the purchase price.  Certain houses may also tack on an additional one to two percent fee in order to cover the marketing costs required to sell your home.  Although this charge may be included in the original seller’s fee, it’s important to be aware of this and know precisely what you’ll be paying. Also keep in mind that the expense of home inspection and any costs involved in the closing will also be incurred and are your responsibility.  A closing fee may set you back more than $1,500. 

4) Be patient and take a moment to evaluate your options.  The gist of auctioning a home boils down to two different approaches: the straightforward method (your home is sold to the highest bidder that day, no questions asked) or the subject to confirmation method which is similar but allows you to determine whether or not you accept the offer provided by the highest bidder. Keep in mind that should you choose to decline the bidder’s offer and they’re unyielding on changing their bid, not only will you once again have a home that’s been sitting on the market and possibly losing value, you’ll also be losing a substantial amount of money due to the fees required by the auction house regardless of whether or not the home was actually sold. Also be aware that auction houses do not take the time to screen or verify your high bidder.  Therefore, if a lender falls through once closing comes around, or if the bidder is unable to secure a mortgage, not only will you have lost money, you’ll be right back at square one.