We noted that NAR’s “Two-Thirds Rule” is nonsense regarding knowing if a particular circumstance is appropriate for auction marketing. The rule — as it’s unfortunately written — says that sellers should look at the market, the seller, and the property — and if two of the three suggest an auction, it may be a prudent decision.
So, suppose the seller has equity, urgency, and reasonable expectations. In that case, the market is where the property is in demand, and the property is one that possibly needs some repair or wouldn’t appraise for the anticipated sale price, do we have all three criteria?
But the Two-Thirds rule says we only need two of the three. So, let’s say the market is where the property is in demand, and the property possibly needs some repair or wouldn’t appraise for the anticipated sale price we’re good? That’s two of the three, right?
What about the seller? What if the seller doesn’t have reasonable expectations and/or no equity? An auction should still be considered? It should not. You see, the Two-Thirds rule fails as an auction here is ill-advised — and as such is nonsense.
The fallacy is that the market or the property has anything to do with it. An auction is a good consideration for any seller with equity, urgency, and reasonable expectations. No property characteristics nor the market itself matter, given the seller’s three essential traits.
Countless auctioneers have rightly sold all kinds of real property in both seller and buyer markets for decades where the seller had appropriate circumstances. Suggesting anything other than the seller’s equity, urgency and reasonable expectations matters is a fallacy.
Here’s our prior writing where we noted other falsehoods in NAR’s treatise on real estate auctions. If you’re considering a real estate (real property) auction, contact an auctioneer in your marketplace. https://mikebrandlyauctioneer.wordpress.com/2023/12/11/real-estate-auction-malarkey/.
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at Mike Brandly, Auctioneer, Brandly Real Estate & Auction, and formerly at Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, and an Instructor at the National Auction Association’s Designation Academy and Western College of Auctioneering. He has served as faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.
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