Real estate agents and developers are often known for their creative marketing strategies to sell houses, which is why one newly constructed home in Plain City is going on the auction block.
"It (the home) appraises for $370,000, and realistically I think fair market is between $345,000 to $350,000," said William Velazquez, co-owner of Parks & Avenues Inc., a construction and land investment firm based in Layton.
The two-story, 3,090-square-foot house will go up for bid Saturday at 6 p.m. Velazquez said he has already received about 170 inquiries about the property, which he hopes will result in a high sales price.
Home auctions by owners are becoming more common in many areas around the country but remain relatively new to Utah. Aside from foreclosures, there are typically three kinds of auctions involving individual sellers — absolute auctions by real estate agents or developers like Parks & Avenues, minimum bid auctions and reserve auctions.
In absolute auctions, the property is sold to the highest bidder, regardless of price. In a minimum bid auction, the auctioneer only accepts bids above a specified minimum price.
Reserve auctions are a bit more complicated. The seller sets two prices — the starting bid and a reserve price, which is the minimum amount the seller will accept. All bidders are given the starting price, but the reserve price is kept secret. When bidding has closed, and if no bid has exceeded the reserve price, the seller has the right to accept or reject the highest bid within a specified time limit.
Velazquez said his property will begin with a minimum bid of $50,000 with no reserve, meaning it could go for far below the market value.
"The reality of it is we have made a commitment that we will sell (the house) to the highest bidder," he said.
Velazquez has already received two formal offers on the property but not enough to cancel the auction. He believes despite some of the possible pitfalls of the auction process, it also has its advantages.
"It helps us control the sale in the sense that it gives us a time frame of when the property will be sold," said Velazquez.
Many sellers in other areas around the nation are choosing auctions for that very reason, especially following the slowing of the housing market in recent months. Even though this is his first foray into home auctions, Velazquez said he is committed to the concept for himself as an entrepreneur and his future real estate clients.
"I think there are a lot of people in our situation that are realistically don't want to leave the sale to question with the market letting it sit with all the other properties in the neighborhood for months," he said.
Though the auction sale of this house is a joint venture with his business partner, Velazquez said he will do future auctions independently under his newly created company myREauction.com, which he hopes will allow him to capitalize on what he believes to be an emerging trend in the housing market.
"I've been doing research and I've seen the statistics for auctions in real estate and how much they've grown in the past three years. I just really see the opportunity there," he said.