Should I List My House Or Sell It Through An Auction?

By CMRFRP

February 7, 2022


So I am going to share some insight with everyone when it comes to using a Realtor to market your property verses going the route of auctioning your property:

Auction Method:


Did you know that auction companies work ONLY for the seller but they want the buyer to pay for their services? I am not referring to just the winning bid at the end of the auction; I am referring to the fees ON TOP of the winning bid. Notice the example below as a reference. The fee they charge ranges from 3-10% of the winning bid, but we will use 5% as a medium for this example:

Your winning bid: $150,000
Buyers Premium (additional buyer fee):
$7,500
Total cost of sale BEFORE closing cost:
$157,500

Now if the property is what you absolutely love, you would pay whatever it takes to get it, AND you weren’t using a Realtor to help you locate that perfect property, then the numbers above won’t matter. However, if you are using a Realtor, here is what many auction companies do that you as the general public may not know. Most auction companies in Oklahoma or that auction property in Oklahoma, such as the ones mentioned above, will go so far as cutting the fee your Realtor worked hard to earn anywhere from 35-100%. What does that mean for you as a buyer? If you want the property that’s being auctioned, you have to pay whatever buyers premium they charge, no questions asked! No negotiations! And where does that leave your Realtor? Hanging out to dry! Your assumption would be that your Realtor would get part of the buyers premium you charged, but the auction company won’t tell you this, but a majority of the time the keep the ENTIRE fee to themselves! And that leaves you as the buyer paying for the services ONLY the seller gets, and you get nothing. No help, no updates, no notices! Nada! Until a day or two before closing when they all want to make sure THEY get paid!

For the sellers they decide to auction their property, this is what many of your numbers will look like as an example:

Sale Price: $150,000
Real Estate Fee paid buyer seller: 3-10% of sale price ($4,500 to $15,000)
Buyers premium paid by buyer: 3-10% of sale price ($4,500 to $15,000)
Marketing cost(non refundable): $1,500 to $6,000+
Total cost of sale to auction company from seller/buyer: $10,500 to $30,000+

As a seller, those numbers can vary since you don’t know what you are going to get from the sale of your property. The auction company can tell you what they THINK it will sell for, but before the sale happens, it’s a gamble you take. And if the auction price isn’t acceptable to you, it will still cost you the auction companies cost of marketing! As you look as those numbers above, the auction companies can make anywhere from 7-15% or more of the sale price from the sale of your home, before their expenses.

Realtor Method (Listing on MLS, social Media, etc.):

When you list your property with a Realtor, they will do there best to earn their keep of their Real Estate Fee (AKA - commission), including offering a part of it, usually half of what you agree to pay, to any cooperating Realtor that brings a buyer for your house. Now the numbers on this look a lot simpler than above:

Sale Price: $150,000
Commission: 4-8% ($6,000 to $12,000)

Now, when you look at those numbers, that is pretty plan and simple. The Realtor that markets your home has to pay out of their own pocket fees for marketing, signs, key boxes, advertising, local, state, and national Realtor dues, and other dues too long to mention. (In some instances, such as luxury listings, some sellers may pay for some marketing cost above and beyond the normal cost of marketing with the intention of being reimburse the cost if and when the house sells.).

As a buyer, when you hire a Realtor to assist you in locating that perfect home, over 95% of the time you won’t have to worry about the out of pocket cost of using your Realtor since it is already built into the sale price of whatever home you end up purchasing, if it is on the local Multiple Listing Service (MLS) in your area. If it is a for sale by owner, auction, foreclosure not listed, or anything else, don’t be afraid to ask your Realtor that they are getting paid. You want to be paid for what you do and don’t want any surprises when it comes to getting your paycheck. So as Realtors, we feel the same. We are happy for you and love helping people find that perfect home they always wanted!

So, in summary, whether you are looking at selling or buying Real Estate, make sure you are well informed of all your options and know the pros and cons of whatever way you decide to buy or sell your next property.

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