Real Estate auctions—onsite and online—are gaining traction. In fact, the National Auctioneers Association reported a 12.5% increase in residential real estate auctions during 2006. No longer just for distressed and foreclosed properties, auctioneers are now selling homes at all price ranges to multiple bidders.

Although online revenues are currently a small fraction of the overall real estate auction sales figure, it’s predicted that the Internet will become a significant part of the auction process.

So are there any drawbacks to selling or buying a home via auction? Well, yes. Take a look at the list of pros and cons and decide for yourself if “going, going, gone” is music to your ears!

The Pros & Cons of Real Estate Auctions

PROS

1. It’s incredibly fast. You could own or sell a property within 30 days.
2. The seller controls the timing of the sale.
3. You’ll save on carrying costs because of the accelerated sales process.
4. Eliminates contingencies common in conventional sales, such as stipulations that a buyer can pull out if he is unable to sell his current home or obtain financing.
5. Auctions generate urgency and competition, which results in achieving the true market value of a property, often higher than what the seller could get using traditional methods.

CONS

1. You may be tempted to pay too much because the competitive auction atmosphere can cause people to get carried away.
2. There’s no cooling off period after contracts are exchanged. You cannot change your mind if your bid is accepted.
3. Homes are sold “as is.”  It’s up to the buyer to ascertain the quality of the property before bidding.
4. Buyers must have cash ready when bidding and then pay the balance in 30 days if they are the purchaser.
5. You could end up with a home that needs much more work than you thought it would.