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Selling a house at auction vs. listing it with an agent

Q. Can you tell me if there has been an analysis comparing selling a home through auction vs. listing?

A. There really hasn't been an analysis worth using. Representatives at Auction.com say they're working on it but don't have comprehensive statistics yet. Anecdotally, they're finding that homes are selling faster via auction because it focuses attention on the actual date that a property is going to be sold. We have heard the same thing from small and large auction companies for years -- it's a main selling point.

What's interesting is that online auction companies are finding ways to work with agents. They need agents to list the properties with them and then the company pays some sort of reduced commission. That way, they're working with agents instead of against them.

While we can't tell you of any studies on the differences between the two methods of selling a home, if you're considering both, you should understand the benefits and disadvantages of each. Some of these differences are more a matter of perception than reality, but nonetheless they affect how people feel about auctions.

For example, some people feel that homes sold at auction may be distressed properties and not worth pursuing. Other people are turned off by the pressure of an auction. Other personal factors may come into play, causing potential buyers to shy away from buying your property at auction, such as the timing of auction or the settlement date.

On the other hand, people might perceive that they could get a better deal in an auction and you might get more interest from buyers. Whether that interest in your home results in a price higher than you otherwise would have gotten if you had listed the home with a real estate agent is hard to say.

Sometimes auctions have fees and costs associated with them that might deter buyers and sellers. However, when it comes to commercial properties, professional buyers may be more inclined to buy an investment property at auction than, perhaps, a residential purchaser.

When you sell your home with a real estate agent, the process from start to finish can be long. It involves listing the home on the Multiple Listing Service, showings that could go on for weeks or months, and then the time from when the sale contract is signed to the day of contract settlement. How long this takes is hard to predict.

When you use an auction to sell a property, the dates are fixed. You know when you will start marketing the home. You set the day of the auction and of the settlement. This type of certainty is good for particular sellers but could unnerve others when they don't control the negotiations. If the home is sold at auction "with reserve" or with a minimum bid price, the seller of the home can decide not to sell the home if the bidding isn't enough for the home. But the seller might nonetheless incur expenses relating to the auction.

Q. My question is both about a line of credit on my home and how variable interest rates might increase. I also wonder how secure these funds are while they are held by the loan servicer. I am concerned about pervasive servicer fraud and the real inability of holding them legally accountable for any fraud they might commit.

A. When you take out a line a credit on your home, you can withdraw all of the funds at once or you can withdraw the funds as you please. Generally, you can even repay the line of credit and draw it down again. The line of credit would work in a similar fashion to a credit card you might have. The funds aren't "funds" until you withdraw them. It's a line of credit secured by the value of your home.

Just like your credit card, you don't owe the bank money on your line of credit unless you've withdrawn money from it. You should be fine if you keep tabs on your withdrawals.

If you're given checks by your lender, make sure that you keep them in a safe place. As with any checking account, you want to make sure there are no unauthorized withdrawals from your line of credit. Monitor your monthly statement.

While there have been instances of misconduct in the past by some mortgage companies and other financial institutions, those issues have been unrelated to your concerns.

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