One of the most difficult parts of the traditional listing process is setting the asking price. If the price is set too low, the property might not bring in all it could. If the price is too high, the real estate might not sell for some time, resulting in holding costs that can eat considerably into the owner's proceeds. Besides the sale date being uncertain, the offer is usually subject to negotiation and contingencies, such as inspections, which can adversely affect the price and make the closing less definite. The auction process flips this over.
Bidding sets the price.
Also, auctioneers typically allocate more for marketing than is the case for a traditional listing. In fact, well-planned marketing efforts are key to an auction's success. Consequently, auctioneers use strong media advertising, targeted direct mail, internet advertising, and other aggressive marketing techniques to get the word out about the auction and attract bidders to it. That's because auctions often generate more interest and greater value than other sales techniques for several reasons. By establishing a definite sale date, an auction creates a sense of urgency that creates buyer interest.