What is a real estate auction?
A Real Estate Auction is a method of buying and selling real estate. It is an intense and accelerated real estate marketing process that involves the public sale of property through open, competitive bidding.
What is an absolute auction?
An absolute auction is a public auction without a reserve or minimum. This means that the property, once the auction begins, will be sold that day.
What is a reserved auction?
A reserved auction is a public auction with a reserve or minimum. This means that the auctioneer will determine whether to pass the property and not sell it based on the owners reserve or minimum price. Some properties are sold with 24 hour owner confirmation, these are reserve auctions as is minimum bid auction may still require owner confirmation.
What is the Buyer’s Premium?
The buyer’s premium is a service charge that is added to the high bid for our public auctions. A 10% Buyer Premium is normal additional to the winning bid. In this regard, buyers pay our fee not the sellers. Sheriff’s auctions or foreclosure auctions generally do not have buyer’s premiums.
What are the general differences between a public auction and a foreclosure?
Generally, a public auction is property for sale by owner either by the owner or thru an agent (Realtor/Auctioneer). The owner is not in financial distress, but has concluded that selling the property via the auction process is the most effective method. More and more people are finding that selling their real estate at auction to be the best way to maximize value in a very timely manner. The owner may be a lending institution who has obtained the property thru foreclosure action. If the home being sold by an owner who lived in the property, they must fill out the Ohio Disclosure form and Lead paint disclosure form. The disclosure forms do not provide any warranty in an “as is where is” auction. Read buyer packet to determine type of deed being used to transfer the property. It is highly recommend that the buyer buy owner’s title insurance.
A foreclosure, on the other hand, is a forced sale by creditors. These auctions are sight-unseen and are generally held on the courthouse steps of whatever county the property is located by the sheriff. Depending on the county the owner may have a right to redemption on the property. You are buying “as is where is”, and you will receive a sheriff’s deed.
What do I need to bring to the auction in order to bid?
You need to bring a State of Ohio ID or Drivers license and either cash, personal check or certified funds as indicated in bidders package or by advertisement. Letters of credit are not accepted.
Are auction sales contingent on inspection?
All of our sales are on an “as-is where is” basis. There are no warranties as to the condition and/or the fitness of the property for a particular use. We encourage our buyers to do their due diligence prior to sale day for their own protection.
When can I inspect the property?
For our public auctions the property is generally available for viewing 30-90 minutes prior to the auction. Additional preview times may be scheduled by auctioneer. You are encouraged to perform all inspections prior to bidding on property; there is no contingency phrase in the purchase contract. If you are not comfortable with your inspection or your hired professionals, do not bid on the property.
If I win the auction, what happens to my deposit money?
The deposit will count as a credit towards the purchase price of the property and placed in escrow. Please note; it is the purchaser’s responsibility to obtain financing. If you plan to use a mortgage to purchase the property, we recommend that you apply for the loan immediately.
What happens if for some reason the buyer cannot settle on the property?
A real estate auction by its very nature minimizes such failures. If the buyer fails to settle on the property, he/she will be considered in default of the sales contract and lose all of their deposit and potentially be responsible for the cost of reselling the property. If buyer fails to close, the auction seller can turn to the next highest bidders, who demonstrated their willingness to pay nearly as much as the buyer who failed to close.
What happens if for some reason the seller cannot settle on the property?
Our service contract states that the seller must be able to deliver free and clear title to the property without any liens or judgments. We do not do an independent title search. Buyer is responsible for title search, if something shows up it will be paid from auction proceeds. In the case that free and clear title cannot be delivered by the seller, the buyer will be refunded his/her deposit.
Who is responsible for closing costs?
For public auctions, the buyer is responsible for all closing costs, as stipulated in our contracts.
How can I be sure that I am getting a fair price?
The only genuine measure of value of real estate is what someone else is willing to pay for it. An appraisal is merely an informed opinion. It is not an offer to buy. The real measure of value of real estate, at any given time, is what it will bring under competitive bidding from informed and motivated buyers.
What are the benefits of selling your property at auction?
The real estate auction is definitely a win-win proposition for everyone involved. The seller disposes of properties quickly and efficiently, thereby saving long-term carrying costs such as interest, real estate taxes and maintenance. For the buyer this can mean a smart investment, since properties are usually purchased at fair market value through competitive bidding. Because the auction sale is conducted in an open forum, both motivated buyers and motivated sellers have the assurance of watching the property’s true market value emerge as the bidding process progresses. For both buyer and seller, fair market values for the property prevail. An auction creates competition among buyers and exposes the property to a large number of pre-qualified prospects. Because it is an accelerated sale, property can often be sold within 6 weeks of listing. For the agent, auctions can mean an increased client and customer base as well as increased profits.
What factors determine the success of an auction?
Desirability of the property being sold.
An aggressive marketing and advertising plan.
Realistic expectations on the part of the seller.
Selecting the type of auction that best suits the property and the seller’s needs.
Conducting the auction in a professional manner and following up through closing.
Are all properties suitable for auction?
Most properties, but certainly not all, are saleable by auction. Some property that has been on the market too long, causing prospective buyers to consider it “tainted.” Or a home that was poorly constructed or planned. These types of properties don’t sell well by any method, price is what makes these properties sell, so you must have realistic minimum to list such properties.
One method used by auction firms to determine marketability is the two-thirds rule. A rule of thumb is that if two out of three parts (market, property, seller) lean favorably toward auction, then auction should be offered to a seller as a sales option.
If a property doesn’t sell auction day is it still possible to market it?
Yes. The auction marketing method has exposed the property to a large segment of the buying public. Many times a buyer who wants the property but is uncomfortable with the auction process will make an offer after the auction date. In other instances offers to buy the property prior to the auction date are made and accepted. Our auctions require a 6 month listing contract after the auction to negotiate with other prospects.
Don’t real estate auctions depress home values?
Real estate auctions reveal the true market value of a property because auctions are conducted in an open forum where all bids are known, and participants are given immediate feedback on the property’s value. At auction, values settle at the level the market can bear, neither elevated nor deflated. With auction, all buyers are competing equally and will net a truer market value.
Who usually buys at real estate auctions?
Anyone can benefit from buying at a real estate auction. Using a lower deposit will lure many people who buy are first-time homebuyers. Neighbors, empty nesters and investors also comprise a large segment of the auction buying public.
I have property to sell, what expenses am I responsible for?
You may be required to pay advertising cost up front. You maybe required to pay a “no sale” fee upfront.
How properties are usually advertised for auction?
Advertising cost are pre-determine base on size, style, location and reserved price of the property being sold. Auction marketing is an intensive effort and a well-timed plan to create massive interest in the properties available for sale. The marketing period is compressed; open houses are limited so buyers are aware of the competition and excitement. The advertising budget is established according to specific properties and the type of market that’s needed to be reached with seller’s budget in mind.
My goal is to advertise your property in the most appropriate means, not to advertise my auction company. You have final say on the budget and type of advertising utilized.
Your property will be advertised in MLS and on my website; you will get at least 1 real estate broker sign and optionally a second auction sale if permitted in your area. Any one attending open house will get a reminder call or email prior to auction. You information may be listed on other websites. A flyer box may be attached to for sale signs. Corner signs will be used as permitted. Print advertisement will be negotiated and may be prepaid by seller
How long to I have to close on the property?
The time frame varies depending upon the type of property auctioned. Generally, our contracts stipulate a 30 day settlement from auction day to closing. Please see the specific terms for each auction to determine the length of time to close.
Why should real estate agents look favorably on auctions?
Increasingly, real estate agents are discovering the benefits of real estate auctions. They are realizing that auctions promote activity in an industry that thrives on activity. Agents can get involved in auctions themselves. If an agent brings a buyer to an auction, and that buyer purchases property, the agent can receive a commission. To ascertain the amount and structure of any commissions to be offered, refer to the particular terms and conditions of the auction contract. This should be previewed prior to buyer viewing the property.
Offers clients and customers new selling and purchasing options.
Increases market share and revenue – new business opportunities are added.
Enhances company’s image.
Develops your own market niche – able to offer new products and services other agents aren’t providing.
Auctions appeal to people – it brings them in to look at all the listings you hold, not just the auction listing.
Auctions cause referral and return business.
Builds rapport with auction firms.
Agents don’t have to be auctioneers to earn commissions –
Earn referral fees as referring agent/broker
Work as cooperating agent/broker
Work as listing agent/broker.
Do you pay broker fees?
Please note, you must register as a buyer’s broker at least 48 hours in advance. There is a form to do so and it must be completed and sent to our office. Verbal agreements are not acceptable.
What should I look for when attending an auction?
When attending a real estate auction, look for:
Availability and Quality of bidder’s packet.
The ease of the registration process.
Support staff and knowledgeable staff.
Availability of financial or pre-qualification services.
A suitable environment.
The use of quality equipment.