Using Auctions as Your Real Estate Investment Exit Strategy

By: Judson Voss

As a successful real estate investor, you need to first set yourself up with good deals, and then secure financing for your deals, and finally you also have to have a solid exit strategy for those properties you ultimately purchase and plan to re-sell. One of the best exit strategies, and one many new real estate investors don't often think of, is using a real estate auction.

Using a real estate auction as an exit strategy can work very well for a number of reasons. By offering a property for sale through the auction process, you create an immediate attention which is focused on the property. This attention can lead to many more interested buyers than the traditional marketing process.

One advantage to using a real estate auction is that it brings a batch of buyers all together in one place and builds a sense of buzz and urgency for the sale of the property. By having a whole group of interested buyers for a property you build the pressure with which they are usually willing to try and obtain the property for themselves rather than let the other people in attendance purchase it. Buyers at a real estate auction often feel that they are insuring they are purchasing a property for its market value because of the other bidders in attendance who they had to outbid to win the property for themselves. If you have two or three buyers who really want a property, they can make your real estate auction really exciting and prosperous at the same time.

Another advantage for a real estate auction is that you can offer a property for sale without having to wait on realtors showing the property and hosting open house events. You simply let everyone interested know that the house will be going up for sale on a certain day, and allow everyone to come on that one day to make their offers if they are interested. This can greatly reduce your holding costs and allow you to turn over your properties much quicker than through traditional real estate marketing techniques.

Probably one of the biggest advantages to using a real estate auction as your exit strategy is that it removes you, the seller, from the negotiating process which usually happens when a property is put on the market for sale. You simply sell the home 'as is' and the buyer is not given the opportunity to negotiate with you on price or closing dates. This greatly simplifies the process and makes it a lot quicker for you as the seller.



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