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Selling house at auction?
I was wondering if anyone has ever sold their house at an auction? MIL lives in a house that is to big for just her (it's the house DH and BIL grew up in so at one point it was the perfect size, but now they've moved out and it's to big). She wants to downsize, and move to be closer to her sons.
The problem is her house needs a TON of work. I mean probably $10k worth of work before she can even think about selling it. And, she wants it all done in the cheapest way possible.
DH's coworker was telling him about how when his mom needed to downsize, they brought in a company to auction off the house and anything in it that she couldn't take to her new place. When he said that at auction, the house is sold as is, DH's perked up. He told his mom about this option, and she is now seriously considering it.
Any experience/advice on this would be appreciated!
Re: Selling house at auction?
Well, the positives are pretty upfront - potential for quick sale, no haggle, etc.
The negatives that you'll find after you interview a few auction houses is that they will very quickly talk out of both sides of their mouth - one to get you to list with them and two get you to think more poorly about your property. They will want your reserve price to be often be significantly less than you want. Some will not take on your property if you don't submit to the price they want to sell it for. The lower the price, the easier they can sell it.
Honestly $10k doesn't sounds like a ton of work - but then again we spent way more than that updating our house previously owned by an elderly lady. It just takes the right buyer willing to do the work and overlook those negatives in the house... as long as the price is right.
We also did buy "as-is" and the price of our offer reflected that. Lucky for us, the grandson and a guardian (along with their lawyers) were in charge of selling and not the lady herself. The grandson had no emotional attachment to the house and just wanted it sold. As long as none of the work necessary will stop the buyers from getting a mortgage, I would list it as is.
Another thing to look into is the percentage that the auction house will charge vs the realtors. That might be a deciding factor as well.
Does she owe any money on it? Also, does it need $10k worth of work to pass inspection? Because I'm thinking that if the kitchen and bathrooms are 20-30 years old, whoever buys it might want to do much more than $10k worth of work.
Anyway, if it's paid for and she can get a HEL or HELOC, she can do the updates it needs (I'd really only stick to structural, maybe wallpaper removal/paint, though - if she's elderly, she won't know what younger couples and families are looking for and spend time and money on something that might not be to the buyer's taste). Then she'd pay off the loan/line of credit when she sells.
Since she just wants to downgrade, she's not on a time crunch, either, though. So if she sells as-is, and the inspection comes back with some roof or electrical issues and she says "I won't pay for those, sorry," that's her perogative. The buyers can either decide to pay, decide to offer less, or walk. She could also give them a credit at closing or knock down the price during contractual negotiations.
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