Please note: This article is part 3 in a series on how to sell your rehab property in South Florida FAST
Let’s quickly recall our scenario.: You have purchased a distressed property from the bank or another motivated seller. You’ve either put your own hard work (and sweat!) into fixing up the property, or you’ve invested in a solid general contractor and team to fix up the property. The house is beautiful and ready for a wonderful family to move into.
You want to sell fast, you don’t want to list your property with a real estate agent because you’re worried your house won’t stand out among the thousands of properties on the market, and more importantly, the agent may not have the time. money or inclination to do something special to market your home.
Now what? Idea #3: Sell Your House Using a Round Robin Auction
You may or may not be familiar with Bill Effros’ book “How to Sell Your House in 5 Days.” The whole premise of the book is that in 5 days you can sell your house for the highest possible price the house demands, risk free. How?
- Day 1-5: Offer your house for 50% of what it is worth.
- Day 4-5: Show your home.
- Day 5: Sell your house for 100% of its value.
There are a lot of details in each of those steps, but that’s the general idea. What I am going to describe next is not exactly the same method, but it is close enough. I would recommend that you go to your local library and buy this book (or as Bill Effros says on his website, if you go to your local bookstore, you can read the entire book in about an hour!).
This is how this would work:
1. Approximately 1 week before auctionAdvertise your home using various means: classified ads in your local newspaper and flyer magazine, a website (you can use a free WordPress or Blogspot and get it up and running with details and images in an hour). If you’re really aggressive, you can buy a list of owners within a half-mile radius and send postcards to all of them promoting the property and the auction. These neighbors will be sure to spread the word to others!
If you do this, be sure to purchase your listing early enough to complete the mailing so that the brochure reaches homes a few days before the auction. Also make sure in your advertising that you are offering the house at an unbelievably low rate that is about 50-60% of the current appraised value (if you don’t know how much your house is worth, ask a real estate agent or go to Zillow. com to see recent home sales in the area)
2. Open your house in Saturday and Sunday to view and accept offers (even accepting $1 offers because that registers potential buyers’ interest and they’ll eventually have to make an actual offer later). Bidding is completely open so everyone can see what the other person is bidding on. There are no secrets here. Bidders will provide the appropriate phone number to be contacted on Sunday night for the Round Robin. Also…on auction day, you should consider putting up signs to direct people to your auction. Or the little bandit signs or better yet live people to hold up big directional signs.
3. We Sunday afternoon, you will have a Round Robin Auction with telephone bidders. How does this work? Essentially, you arrange the bidders from highest to lowest, and then call each person to let them know what the highest bid is and ask if they’d like to advance the bid by a minimum of $1,000 (or $500 if your expected asking price for the house is low). Keep ordering the list from highest to lowest with each round and call everyone until there is only one winner left.
4. We Monday, you accept a deposit and sign a contract with the highest bidder! Ideally, you’ll want to make sure the person has already been pre-approved for financing before you sign a contract with them. You can also accept endorsement contracts from the next 1 or 2 highest bidders.
These types of Round Robin auctions have been held successfully for years across the country by various real estate investors (including my company) and homeowners.
The true value of your home will be discovered when you hold an auction like this. The only risk involved is the loss of marketing dollars for the auction. For those who doubt this and wonder “What if my highest offer is for less than what I owe on the house?” Well, the deal can’t go through if you can’t pay off your mortgage debt! Don’t worry here. Just trust the process and do it. You will be surprised by the results!
