Auctions do not require the owner to do expensive home inspections or costly repairs. People are also happy because the process enables sellers to set the starting price of the auction, as well as the lowest price they are willing to accept. Auctioneers often recommend owners to set a 10 to 15% reserve below the market value of the property, meaning that the owner will very likely lose a considerable amount of equity upon the sale. In addition, the owner must pay the auctioneer’s commission, which usually ranges between 1.5 and 4% of the property’s final selling price. The homeowner must also pay for the promotion of the house, which usually amounts to around $1,000. After considering these aspects, we can surmise that while auctioning is a fast way to save a house, it’s often an expensive option to take, one that might end up costing the owner dearly in equity. As a homeowner, make sure you evaluate all the costs and benefits of this method carefully, before deciding to auction your home.
OPTING FOR A SHORT SALE
Short sales are usually a direct result of financial difficulties that make the owner unable to continue to make the required payments to keep the house. When you owe more on your home than its value and you need to sell—for instance, to avoid foreclosure—the transaction in which you sell your property is called a “short sale.” A short sale requires your lender’s approval because they will be accepting less than what they’re owed. Among the most common reasons for a short sale is to avoid going into foreclosure.
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