"Welcome to T’d of Tuesday’s. This will be a weekly blog post that will focused on myths about the auction industry. This post will include both how and why these myth’s “T” me off. I will include what exactly causes people to assume these myths and also why these myths are indeed myths. I will also include and prove each myth to be indeed be false. To find out more about the myths of the auction method log on every Tuesday."

Myth #1 All Auctions Are Distress Situations.

By Justin Croy
Culver, IN
colcroy@gmail.com

(Image credit: alternet.org)

Many people in the world believe that real estate auctions and auctions in general are “distress sales.” This means that the seller is only selling at auction because they are under some kind of distress, such as foreclosure, divorce etc. This idea is completely false. The auction method of marketing is the most; Fun, Fast and Transparent way to sell assets and through many year of strong advocacy the National Auctioneers Association has reviled to people all across the world that using the auction method can be very profitable vs. the private sale.

This idea has come about because of the wide “like” of distress auctions. Many times people cannot pay their mortgage and their house becomes foreclosed. A lot of home owners build large immaculate homes then realize that they cannot afford due to unforeseen circumstances. Then, as the law states, the house is repossessed by the Mortgage Company or bank and gets sold at auction. These foreclosure auctions a lot of times are absolute. This means that the auction is sold to the highest bidder without reserve or minimum price. Several times due to the terms and conditions of the auction, these properties will sell for a value that is well under “market value.” This means that buyers have the opportunity to score a great deal on a home. This associates low price and distress with the auction method and in return creates a Pavlovian Effect when people hear that something is going to auction.  

This “T’s” me off as an auctioneer because many times, homes are sold for more than market value and are not sold because of a contingent circumstance. Many people bring real property to auction because they know that the auction method will create a competitive bidding atmosphere that will result in higher prices.

In conclusion not all auctions are “distress sales.” People across the world are selling their real property at auction not because they have to but because they want the highest price for their assets. For more information about this topic check out other articles by clicking here. For personal questions respond in the comments or email me at colcroy@gmail.com

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