Tips and Tactics for Selling
Your Home Through Auction

(See Corrections & Amplifications item below.)

Question: My mother has been trying to sell her old house for more than a year. The home is in a nice neighborhood and she's put in new neutral carpet and paint, lowered the price below market, and tried a couple of real-estate agents. But the market has cooled and the house has seven bedrooms, which is more than most people want. If we were to try an auction, where would we begin and how should we proceed?

-- Brian (last name withheld upon request), Cleveland

Brian: Your letter is yet another indication that the seller's market is going, going, gone. And since your mother has already tried a number of sensible ways to sell her home without success, an auction seems like a reasonable next step.

Many people hesitate to use auctions to sell their homes, thinking it reeks of desperation or impending foreclosure. But that's not always the case. Often, sellers turn to auctions to create a sense of urgency when there are too many similar houses on the market, or, conversely, when a property is unusual in some way. And as anyone who's ever surfed on eBay can attest, the excitement of an auction can churn up interest where none had existed before.

A friend of mine discovered that when he tried to sell his huge, beautiful farm in the Eastern Shore of Maryland a few years ago. It was in pristine shape and listed with the top agent in the area, but was situated on a remote peninsula, where few people ever visited. Frustrated, he put the house up for auction with a company that specialized in real-estate sales. He sold it for a little more than his asking price before the auction ever took place. The buyer had become entranced with the property from the brochure the auction house had sent out, and decided to grab it before anyone else could.

So how do you find a good auction house?  The Gwent Group, a a 58-year-old Bloomington, Ind.,  consulting firm, says there are 1,000 auction firms across the country that specialize in real estate, and they're getting busier all the time. According to the National Auctioneers Association, sales of residential properties reached $14.2 billion last year, a 24% increase over 2003.  Stephen Martin, president of the Gwent Group, suggests that you visit the National Auctioneers Association Web site and look for an auctioneer who has received a Certified Auctioneers Institute designation, which requires members to have at least two years of professional auction experience and adhere to a program of continuing education. You should ask auctioneers to provide you with a marketing plan, evidence that they've sold homes similar to yours, and samples of the sorts of advertising materials, including brochures, that will be used to promote the sale.

Once you've signed with a firm, you'll have to decide whether to sell the house with a "reserve" or floor price, or "absolute," meaning the highest bidder wins, no matter how low the bidding stops. Although setting a reserve price may give you less anxiety, Mr. Martin says that homes sold absolute usually attract more bidders, and therefore command higher prices.

Normally, about six to 12 weeks elapse between the time you sign with an auction house and the sale date. Expect to pay a seller's fee that typically ranges from 5% to 8% of the purchase price to the auction house. You'll also have to pay for a home inspection, since potential buyers don't want to be surprised by leaky pipes or defective furnaces. "They know that once the hammer goes down, it's theirs," Mr. Martin says.

-- June Fletcher is a staff reporter at The Wall Street Journal and the author of "House Poor" (Harper Collins, 2005). Her "House Talk" column appears most Mondays on RealEstateJournal.com. Email your questions about the residential real-estate market. Please include your name, city and state. If you don't want your name used in our column, please indicate that. Due to volume of mail received, we regret that we cannot answer every question.

Email your comments to june.fletcher@wsj.com.

Corrections & Amplifications:
Selling a home through auction "absolute" means that the highest bidder wins, no matter how low the bidding stops. A previous version of the column incorrectly stated that the lowest bidder wins.