We are all familiar with the use of auctions to sell just about anything. Open any newspaper and you will see a variety of auctions:
- Equipment auctions
- Seized property auctions
- Foreclosure auctions
- Estate auctions
- General merchandise auctions
- Etc…
But one that I have never seen is a rental auction.
And that is in a way strange.
Auctions attract a lot of people and out of the ordinary auctions can attract a lot of press attention - which of course means more people showing up at the auction.
Here are the interesting points of a rental auction:
- The market is determining the rental price of the property.
- You as the owner can stipulate the the winning bidder must be approved for the rental contract in the standard manner - background and credit checks - so that the owner is not saddled with a bad contract.
- You can use this as a great lead generation system for your other rental properties. By collecting registration information - required to bid - you will have a list of people who have identified themselves as wanting a new place to rent. If you have multiple units available, you have a hot list of prospects to contact about your other units.
- A rental auction would generate a lot of local publicity. You would need to send a press release to the local newspaper and radio stations in advance of the auction date to inform them. They would all talk about it because it is something new and thus newsworthy.
- It can be the quickest way to get your property rented in a slow rental market because people will always come out in droves if they think they can get a bargain.
- You can set a lower limit on the amount that you will accept (a reserve price) so you do not give away the rental. This lower limit can be higher than the opening bid. In fact it is quite common for an auctioneer to start the bidding process low to generate a frenzy of bidding. (Of course the auctioneer will explain this this is a reserve price bid to cover his legal obligation to not give the rental to the highest bidder if the reserve price is not met.)
As you can see, a rental auction can offer you a variety of great benefits. And the more units you have coming onto the market, the more valuable it is. Imagine getting dozens of leads to follow up on for your other units at no additional cost - and in fact having your local newspaper and radio stations help you get those people in your pipeline at no cost to you.
So next time you are facing challenges getting renters, you may want to look into doing the very first rental auction in your community.
Note: Depending on state laws, this auction may need to be handled by a license auctioneer. So be sure to check your state laws before conducting your first rental auction. And expect to invest some time in educating the auctioneer.
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