Most properties are salable by auction. All types of real estate, including residential, commercial and industrial property, farm land and even boat docks are sold at public auctions. Not all property, however, is suited for auction. If a property will only appeal to a narrow market, auction may not be the most effective marketing method.

The Auction Two-Thirds Rule

One method to determine if auction is the best marketing strategy is the Two-Thirds Rule. This involves analysis of the market, property and seller situation. Generally, if two of the three parts (market,seller,property) lean towards auction, then auction should be considered as a sales option.

A good auction situation is one where the seller:

  • Needs immediate cash.
  • Has a partnership or marriage break-up.
  • Is moving out of the state.
  • Wants to liquidate an estate.
  • Is retiring.
  • Is an auction-minded seller.
  • Knows the auction will bring a fair market price.
  • Has high carrying costs on the property.
  • Has 25% or more equity in the property.
  • Property is scarce and will encourage buyer competition.

Each property is unique, and requires a detailed analysis to determine if auction is the best approach for selling. Tim Eiting has over 30 years experience auctioning all types of property.

This content is not the product of the National Association of REALTORS®, and may not reflect NAR's viewpoint or position on these topics and NAR does not verify the accuracy of the content.