Why do people choose to sell property at auction? There are all kinds of reasons, but many of those reasons fall into one of five categories.
Basically, other than those buying and selling for a profit or business, some sort of change (and not always a pleasant change) is the primary reason auctions occur.
What types of change drive the auction business? We suggest the five D’s comprise the primary drivers of the auction industry in the United States:
Death
Divorce
Duty
Drugs
Downsize
Death. Yes, there is overwhelming evidence that, “You can’t take it with you.” Many times upon death there is both the lack of interest or space for family to retain personal and real property. Further there are often debts to be paid, for which the sale of property can help satisfy.
Divorce. When parties divorce, many times neither party wishes to retain certain personal or real property assets — or both parties wish to retain the same assets. In either case, an auction can be beneficial. As well, the cost of divorce can be paid, in part or whole, with the proceeds of an auction.
Duty. Court-ordered or statute-dictated auctions are common. Foreclosure, repossession, receiverships, seizures, forfeitures, bankruptcy, land-sale actions, storage liens and municipal or other publicly-held liquidations make up the common duty-type auctions. The overriding presumption here is that it is the seller’s duty to offer certain property openly and fairly to the general public, and for the highest and best bid.
Drugs. Nearly 10% of the United States population abuses drugs (alcohol, pain relievers, stimulants or tranquilizers) on a regular basis. Frequently abuse leads to addition, which then leads to financial hardship. Such a drug habit often requires additional extraordinary funding — which an auction can help satisfy.
Downsize. A business moving from a 40,000 square foot warehouse to a 4,000 square foot office? A homeowner in a 3,500 square foot home moving to a retirement village apartment? Auctions are often used when people or businesses have excess property for which they have no need or ability to retain.
Auctioneers looking at this list from the other end might rightly wonder — if there were no deaths, divorces, duties, drugs nor downsizing — would there be far less auctions? It appears so. Auctions are an efficient, quick, fair, profitable way for property to be sold in these situations as well as others.
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. He serves as Adjunct Faculty at Hondros College of Business, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.
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