Auction Myths – Personal & Commercial Property

Myth No. 1

Auctions are the last resort.

If auctions are the last resort, then why are record sales prices for collectibles, art, equipment, and real estate all set at auction?  Its simple, AUCTIONS CREATE COMPETITION. No other form of selling allows the seller to receive MORE than he was initially asking through competitive bidding.

Auctions have often been deemed the last resort because sellers have overpriced the items, under advertised, waited the market out, and then turned to the auction method to “save the day”. Haven’t you seen pieces of equipment sitting for long periods of time with an unrealistic sales price only to be sold at auction for market value? Statistics show that when a seller chooses the auction method first, great prices are achieved and sometimes even records set.

Myth No. 2

Auctions cost too much.

Many sellers have issues with the costs associated with selling at auction. Auctioneers charge a commission based on the value of the item. Those commissions cover signage, direct mail advertising, newspaper advertising, internet advertising, set-up labor etc. Those costs can run into the thousands if not tens of thousands of dollars depending on the type of items being sold.  Often we ask our customers to refurbish their equipment prior to sale; this means a new coat of paint or seat, maybe some new tires which always cost the customer something. But think about it this way, when you spend a little amount to make your piece look like new, your adding value. That value is translates into dollars for the seller. Often we find that if a piece is painted in good working condition it will bring 25-30 % more than its unpainted counter part. So an investment of a little paint and tires that may cost you hundreds can bring you thousands.

Myth No. 3

Auctions don’t work.

Auctions DO NOT work for unmotivated, unrealistic sellers. Some sellers want the dream, to buy a piece of equipment, use it for an extended period of time and then sell it for what they bought it for. These sellers are not willing to sell at TRUE MARKET VALUE.  Have you ever tried to buy something from someone who did not really want to sell it? Remember how you felt when you realized that their asking price was far greater than your perceived value? If buyers don’t think the equipment is for sale at a reasonable fair market price, then they wont take the time to travel to the auction, and make the necessary financial arrangements to buy.

Auctions work because of greed, its part of human nature. There is a deep fundamental and psychological difference between a private sale and an auction sale. The psychology of a private individual sale is: "What is the least I can give and still buy the item." Isn't every potential buyer you meet trying to "horse trade" you down on the price?

The psychology of an Auction is: "What is the highest price I am willing to pay to buy it?" Every buyer is constantly thinking about their upper limit. "How much more can I give?" They are not thinking about trying to get your price down, but how much higher they can take their bid up!

Myth No. 4

All Auctioneers and Auction Companies are created equal.

What separates auction companies?

1. PERFORMANCE on auction day characterizes the differences between any one auction company and another. Lots of Auctioneers claim they can sell your equipment. But they fail miserably because they don’t advertise properly and don’t have the inside connections within the industry to effectively market your equipment.
2. PROFESSIONALISM sets the tone for auction day. If buyers realize that they are attending a well organized, advertised and conducted auction. They will realize that the competition will be stiffer and that they will have to step up to buy want they want or need.
3. INTEGRITY is a must of this business. Sellers appreciate it when the auction company does what it says it will do. Buyers appreciate it when the auctioneers accurately represent each piece as to its condition and usability.

The single most important element of the auction is the auctioneer. His skill ability, salesmanship and overall performance will directly affect your bottom line. Our Auctioneers are some of the most well trained and respected auctioneers in the country. They will control the auction's tempo to create excitement among the buyers and encourage the bidders' enthusiasm. These techniques are needed to keep the auction moving and the buyer’s attention. The ability to attract good buyers is an important part of auction sale day success.

Each of our auctions is designed with the comfort and convenience of the buying customer in mind. A successful auction needs the right kind of buyers. Our company has developed a strategic alliance with some of the largest auction buyers on the west coast, when buyers learn it's “another Pacific International Auction" they know they will be treated fairly and will make sure to be in attendance.

Myth No. 5

Blue Hound Auctions only sells Million Dollar Auctions.

While we wish this myth were true, it certainly is not the case. Blue Hound Auctions sells auctions sales of all types and sizes. Whether you have one piece or an entire fleet, we can help you merchandise your items. We operate as your strategic business partner to develop profitable solutions for your outdated inventories or unproductive surplus equipment that will help you to achieve your business and financial goals.  With over 10 years of experience, Blue Hound Auctions is the auction company of choice.

6 Myths of Real Estate Auctions

Myth No 1:

Real estate auctions are like FIRE sales for distressed sellers.

Nothing can be further from the truth. Sellers of all types of real estate in the United States, are increasingly looking at auction to correctly market and promote their distinctive property and capture maximum value.

Myth No 2:

Auction is not the best method to capture the maximum sales price for your home.

A typical listing starts at the highest price and waits for an offer, when none come in, it works its way down. Whereas an auction works up in a competitive bidding environment.

Myth No 3:

If the property does not sell at auction, it is very difficult to market and sell subsequently.

On the extremely rare possibility that the property does not sell at the event, the real estate auction and marketing method has exposed the property to a large segment of the buying public. A buyer who wants the property but maybe uncomfortable with the process will make an offer after the auction date. In many cases offers to buy the property prior to the auction date are made and accepted.

Myth No 4:

If the property sells for less than the seller hoped for, he must accept the bid.

There are two basic types of auctions. Absolute and Reserve. In an Absolute Auction, the property is sold with no contractional minimum, or reserve sales price. An absolute auction attracts of average of 30% more bidders for the simple fact that the buyers perceive that they will get a deal. However, in a Reserve Auction, an agreed minimum price point is set. If the bidding does not reach this point, the seller is NOT obligated to accept the bid.

Myth No 5:

Real Estate auction houses are competition for real estate agents.

Blue Hound Auctions, LLC. welcomes and seeks cooperation with agents and brokers and will pay commissions on referrals and sales.

Myth No 6:

The auction method is the fastest growing method of sale for high-end unique and luxury estates in North America.

TRUE!  According to the National Auctioneers Association in 2004, $48 billion in real estate was sold at auction, up from $42 billion in 2003. By the end of 2006 these figures are expected to top a staggering $68 billion. Note: In Australia, it is the only way they have ever marketed and sold real estate.