A round robin auction is useful in selling a house in a fast way, without sacrificing a large amount of equity. The idea is to have as many people as possible visit the house for sale on the same day. Have them place bids on the house and then you sell the house to the highest bidder.
When done correctly, this can be a very effective strategy. The real key to your success in the round robin is to carry out a powerful marketing campaign. You want to attract as many potential buyers as possible to the house. The more buyers at the house, the more money you will make.
First thing you need to do is pick a date for your event. Schedule the event at least 2-3 weeks out on a Sunday. Make sure not to fall within 7 days of a major Holiday or special weekend. Use common sense here. After you've picked the date, you will want to pick the “advertisement” price. The price is really the “hook” that will grab people's attention and attract them to the event. So why is the price the “hook?” Because your going to price the house low! You want the price to stand out so that everyone will want to find out what is going on. Example.. if the houses are typically selling around $200,000 and you're advertising yours for $180,000, then what's the bid deal? But what if that same house was advertised for $120,000 or best reasonable offer? That's an exciting price that will generate interest in your home. Just make sure not to price the home too low that people would start getting suspicious that something is wrong with the house.
Now start your marketing campaign. The most important part of your advertising is the newspaper ad. You want to place an ad in the “For Sale” section and also in the “Open House” section and have it run for 1 week straight, right up to the day of the event. You can use your own phone number, but I recommend hiring an agency to take the calls. You should also make recorded messages that explain the details of the event along with driving directions. If you have a website, I would post the “Round-Robin” instructions and directions on this page.
The rest of your marketing should include some of the following tools; Flyers posted around the neighborhood, posted in local businesses, and if possible fax blasts. Local newspaper ads, trader magazines, and anything else you can think of. Warning…Do not go cheap on marketing! Don't try and save a few hundred dollars on flyers and then end up losing thousands of dollars off your final sales price!
Last marketing you'll want to do is driving signs and directional arrows pointing to the house. A few days before the event, put these directional signs up around the neighborhood and major cross streets so people can see them. At the event, you'll want to hold the open house for a few hours only. Make sure to note these times. When people show up at the house, you'll need to have a bid sheet available for everyone interested to make an opening bid. Keep the bid sheet in the open so everyone can see it. Once a bid is placed, the next person will have to bid by at least $1,000 dollars higher.
After the event, you should have a list of bidders that you will call one by one, starting with the lowest bid first. Explain how the process works, and ask them if they would like to top the highest bidder or withdraw. Everyone will have a chance to top the highest bidder, unless they have withdrawn from the bidding. Once you have gone through the process of calling everyone in a “Round-Robin” fashion, eventually you will be left with your winner.
At this point, you congratulate your winner and then set a time to meet the following day in order to fill out the purchase and sales agreement and open escrow!