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California Premier Auctions, Inc.

The Real Estate Auction Company

For quick results sell your real estate at auction!

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"...What I needed was URGENCY---A reason for buyers to buy my house in as-is condition-NOW. And that is why I went with the auction format... BIG SUCCESS….My problem home was SOLD!!!"
-Mark F.

  » Are You an Auction Candidate?

Selling your property by auction through our company can have several advantages.  However before you decide to use our accelerated selling service it is very important that you truly understand how the traditional method of listing with a realtor differs from the service we offer.  Below are the main differences:

 

  A realtor listing typically relies on the MLS and a yard sign to try and get the job done.  In contrast, we utilize a massive marketing campaign that emphasizes the chance for the buyers to get a deal.  This creates urgency, excitement and more importantly brings people to view your property.  The MLS and sign are just two of the many marketing strategies our company uses.

 

  The traditional method using a realtor relies on drawing buyers by a pre-determined listing price, usually based on current comparable sales.  When buyers don’t bite, the price is lowered until the property either sells, becomes stale or the listing expires.  Our auction approach is more pro-active and is designed to sell any property in just 30 days through a live auction format that produces a price inspired by competitive bidding.

 

  The two biggest expenses in a buyer’s market with a vacant property are holding costs and price deterioration costs.  The longer it takes to sell, the more these expenses eat into the bottom line.  For example if it takes 9 months to sell and close using the traditional method and holding costs are 0.75%/mo and prices are deteriorating at 1.5%/mo, the total of these two critical expenses would be 18.75%.  In contrast using our auction method, holding and price deterioration costs would be just 3% with property we sell.

 

  Other traditional listing costs include incentives to lure a buyer as well as miscellaneous expenses for work the home inspector and termite company recommends.  In a buyer’s market these expenses can easily be 6% using the traditional method.  Our auction method, on the other hand, is designed to be a non-contingent sale and our clients do not pay for any of these other costs.  Our incentive to the buyer is the chance to get a deal.

 

  Commission to the seller charged by realtors is usually 6%, whereas we charge the buyers in the form of a buyer’s premium that is added to the final bid. 

 

•  Title insurance is paid by the sellers in a traditional escrow but with our auction process it is paid by the buyers.  Our company also pays for a home warranty policy, normally a seller’s expense.

 

Below is a table that summarizes the costs of both methods in a buyer’s market:

 

Possible Selling Costs

Based on a vacant property in a buyer’s market

 

  Traditional Method Our Auction Method
  (9 mos. to sell & close) (2 mos. to sell & close)
Holding costs 6.75% 1.5%
Price erosion costs 12% 1.5%
Incentives 4.5% 0
Miscellaneous 1.5% 0
Commission 6% 8% *
Marketing 0 2%
Total (approx.) 30.75% 13%

 

*The buyer is actually responsible for paying the commission in the form of a buyer’s premium, however it can be a deduction from the seller’s net, so it’s included as an auction method selling cost.

 

  Closing rates should also be scrutinized before a decision is made whether or not to use the auction method.  Our cumulative closing rate is over 90% versus approx. 50% using the traditional method (according to Realtor.org).  Because our sales are non-contingent and we hold a large non-refundable deposit from the buyer in our trust account, the closing rate is extremely high.  The traditional method involves contingencies and a small deposit held in escrow that is refundable if the buyers decide to back out; therefore the overall average closing rate is about half of our auction closing rate.

 

If you’re an investor who buys and sells property, selling and closing quickly allows you to move on to the next deal faster and ultimately should generate higher annual net profits.  When it could take 9 months or more to sell using the traditional method through a realtor and only about half of the escrows close, there can be a reluctance to buy and sell property during a buyer’s market.  By selling in one month and closing in one month, the negative effects of holding costs and price deterioration costs can be mitigated by selling with our auction selling process however.

 

Our auction method of selling real estate is designed to bring the same net price (or more) than the traditional listing method…in just 60 days.  It is based on the concept that receiving your equity in 2 months has much less risk and more financial rewards than receiving your equity in 9 months… especially in a declining market.  In order to be considered as a candidate to sell using the auction method, an understanding of the time value of money is necessary and also an understanding of what the true costs can be by selling using the traditional method.  Hopefully you will make your own calculations of these critical costs and other factors before selecting the method in which to sell your property.

 

Included is a form we use that will assist you in determining approximate potential selling costs, so a net figure can be calculated using the traditional method.  We can furnish you inventory numbers (listings) vs closed sales to help compute how long it may take to sell through a realtor.  Also we can provide you what the percentage of price deterioration is currently so you can make a better prediction of what it might be moving forward.  To summarize, please review chart below:

 

Comparison Chart for both Selling Methods

 

 

  Traditional Method Our Auction Method
Price guarantee None Yes*
Avg. total selling costs 25-35% 12-15%
Selling time Unknown 30-45 days
Contingencies Many None
Title ins. paid by seller Yes No
Closing rate (approx.) 52% 93%
 

 

*  If the highest bid is rejected we will pay you 1% of the total price generated at the auction if you are able to sell and close for a higher net cash price in 70 days after the auction.

 

Because we are very confident our auction process will out-perform the traditional method of an extended listing through a realtor overall, we offer two types of reserve auctions.

 

 

Reserve  -  With this program we agree on a net price based on the true selling costs using the traditional method.  If we don’t reach this net price there would be no production fee charged.  Your mortgage payment would be made by us for the time it takes to sell your property.

 

Seller Confirmation  -  We agree on a ballpark price as with the reserve auction venue above, but you would have full control over whether you accept or reject the highest bid.  You would be responsible for paying the upfront marketing costs and a production fee.  If the bid was accepted and escrow closed, you would be reimbursed half of the marketing costs and the production fee.  If you reject the bid and were able to sell for a higher net price within 70 days after the auction, the production fee we charged would be reimbursed to you.  This is our price guarantee to you!

 

* Note- in some cases an absolute auction (no reserve) might be suggested as the best auction venue.

 

If you think our auction method might benefit you, please let us know.  We look forward to assisting potential sellers who understand the time value of money, can acknowledge true selling costs of the traditional listing method and have realistic expectations.

 

Elite Auctions

 

 

Disclosure: This is provided for informational purposes only.  Elite Auctions will not be held liable for misrepresentation of the data presented.  There are no assurances or guarantees made from any of the examples given.  Each real estate transaction is unique and will have different results.