Is A Real Estate Auction?
2. What Are the Benefits of a Real Estate Auction?
3. Are All
Properties Suitable For Auction?
4. If The Property Doesn't Sell At Auction Is It
Still Possible To Market It?
5. Can I Be Sure Of Getting A Fair Price?
6. Don't Real Estate Auctions Depress Home Values?
7. Real Estate Auctions Are Often Thought Of As A "Fire
Sale" For Someone Who Cannot Meet Their Mortgage Payments. Is This True?
8. What Factors Determine The Success At An
9. How Are Properties Advertised For Auction?
10. How Long Does It Take To Market The Property, Have The
Auction and Close The Sale?
11. What Terms Does A Property Sell At Auction And Who Sets
12. What Happens To The Earnest Money If A Buyer Decides At
A Later Date Not To Buy The Property?
13. How Much Does An Auction Cost?
14. What Are The Various Methods Of Auctioning?
15. What is A Buyer's Premium?
16. What Are The Advantages To The Seller In An Auction
17. What Are The Advantages To The Buyer In An Auction
18. How Can I Participate In This Real Estate Auction?
19. Does The Owner Have To Take The Highest Bid That Day?
20. What Is Meant By "Suggested Opening Bid?"
21. If I Am The High Bidder, Is My Bid Contingent Upon Me
Obtaining a Mortgage?
22. If I Am The High Bidder, Is My Bid Contingent Upon Any
23. Can I Purchase An Auction Property Prior To The Auction?
24. Can An Auction Help Sell My Property?
25. Would An Auction Help Sell My Property Quickly?
26. Can I Auction My Property If It Is Listed With A Broker?
27. How Do I Choose An Auction Company?
28. What Are The Terms In A Typical Auction Contract?
29. How Does A Buyer View And/Or Inspect The Property?
Should I Fix-Up My Property Prior To Listing It For Auction?
What Is A Real Estate Auction?
A. A real estate auction is an innovative
and effective method of selling real estate. It is an intense, accelerated real
estate marketing process that involves the public sale of any property -- most
certainly including those that are nondistressed -- through open cry,
What Are the Benefits of a Real Estate Auction?
A. 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 assurance of watching the property's true market
value emerge as the bidding process progresses. For buyer and seller, fair
market value for the property prevails.
Are All Properties Suitable For Auction?
A. Most properties, but certainly not all, are saleable by auction. Residential
property including town homes, condominiums, cooperative apartments and single
family homes, commercial property, vacant land, even boat slips-are sold at
auction. The majority of sound developments that can be marketed effectively do
extremely well at auction. The best auction marketing companies, before
accepting a project, will: 1) know the market and 2) analyze the property and/or
closely to ensure success for both the buyer and seller.
If The Property Doesn't Sell At Auction 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.
Can I Be Sure Of 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.
Don't Real Estate Auctions Depress Home Values?
Not at all. 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 properties value. At auction,
values settle at the level the market can bear, neither elevated nor deflated.
Real Estate Auctions Are Often Thought Of As A "Fire Sale" For Someone
Who Cannot Meet Their Mortgage Payments. Is This True?
A. Although most other forms of auctions, like art auctions, have a very
positive image, real estate auctions at times, have suffered from a poor one. A
majority of auctions today don't result from individuals' repossessed
properties, but rather are the result the smart seller, usually a builder, fine
estate home or financial institution, who chooses the cost effective,
accelerated method selling a property or development rather than laboring for
months or years to sell the property or unit one by one. This accelerated sale
allows the seller to eliminate virtually all long-term carrying costs.
These cost saving are passed along directly to the purchaser. It is truly a
win-win situation. Property owner can move on with their lives, developers can
move to their next project, and buyers can purchase quality properties at fair
What Factors Determine The Success At An Auction?
The desirability of the property being sold. This includes location, condition
and surrounding properties. An aggressive marketing and advertising plan are to
prospective purchasers. Realistic expectations on the part of the seller.
Selecting type of auction that best suits the property and seller's needs.
Conduction of the auction in a professional manner and following through
closing. Undertaking due diligence beforehand so buyers are knowledgeable. The
only issue that remains is price.
How Are Properties Advertised For Auction?
This varies greatly depending on the type and value of the property being sold.
One essential key for a successful auction is a highly aggressive marketing
program. Each auction has its own powerful promotion and advertising. Auction
marketing is an intensive effort and well-timed plan to create massive interest
in the properties available for sale. The advertising budget is established
according to specific properties and the type of market that's needed to be
reached. That budget is then broken down into various forms of advertising that
will best target market for that auction.
The various forms of advertising are: brochures mailed directly to prospective
purchasers and posted in public places, newspaper advertising in local and
possibly regional or national papers, ads in trade journals and magazines, radio
ads, signs posted on the property and cable television ads and phone
solicitation. A qualified and experience auction company knows which forms of
advertising are best for a particular type of auction and its location and will
facilitate everything from preparing the advertisements to placing them in
desired forms. The aggressive advertising hits large groups of buyers that will
come and competitively bid on property thereby yielding true fair market value
for a seller's holdings.
How Long Does It Take To Market The Property, Have The Auction and Close The
The time frame varies depending upon the type of property auctioned. Generally,
the process can take 45 to 90 days from listing to closing, but can be
accelerated if the situation and conditions are right. The auction itself may
take anywhere from twenty minutes on a single property to all day on a
What Terms Does A Property Sell At Auction And Who Sets The Terms?
The seller sets the terms with the advice of the auction company. Some terms
included in the auction contract are as follows:
The high bidder deposits earnest money (either a percentage of the purchase
price or a stated set amount) and enters into a purchase contract immediately
following the auction; the balance of the purchases price is due within 30 to 60
days at the closing. Properties generally sell "As Is" with no
warranties expressed or implied. Since
the only issue left is price, due diligence is done in advance of the sale such
as preparation of information packages and inspection reports.
What Happens To The Earnest Money If A Buyer Decides At A Later Date Not To Buy
Many of the same things happen in an auction situation as in any other real
estate transaction. The earnest money deposit is forfeited if the higher bidder
is unable to consummate the sale regardless of the reason. If the seller fails
to close because of defective title, etc., the buyer's deposited will be
How Much Does An Auction Cost?
A. Auctioneers, like other real estate professionals charge a commission, a
percentage of the sale price. The commission is sometimes negotiable. In
addition, the out-of-pocket expenses relating to the marketing and promotion as
well the conduct of the auction are paid by the seller or with the "Buyers
What Are The Various Methods Of Auctioning?
A. Essentially, there are three different types of auctions:
(or auction without a Reserve) - Properties
sold at this type of auction are sold to the highest bidder, regardless of the
price. The main advantage of an absolute auction is that it generates maximum
response from the market place. Since a sale is guaranteed regardless of the
price, buyer excitement and participation are heightened. Because this type of
auction generates an ideal response, many estate properties, financial
institutions and government agencies have begun to use this method in greater
frequency. Despite the fact this type of sale attracts a larger number of buyers
and high bid offers, the guarantee sale at the highest bid, regardless of price,
often makes a seller feel nervous and at risk, it often brings the highest bid
due to the strong number of bidders this method generates.
The auctioneer will accept bids at or above a disclosed price. The minimum price
is always stated in the brochure, in the advertisements and is announced at the
auctions. An alternative approach is to post a suggested "opening
bid", but that opening bid does not commit the seller to sell at that
price. An advantage to selling via the minimum bid method is that it creates a
safety net for the seller that does not exist in the Absolute method. The
seller's risk is limited in that the price that the property sells for will fall
above a minimum acceptable level. Disadvantages to this method are that the
seller limits interest in the auction to only those buyers who are willing to
pay the minimum bid price and the fact that there is minimum bid makes it
difficult to generate the proper excitement.
WITH A RESERVE
- The auctioneer may or may not post or otherwise advertise a minimum bid, and
the seller reserves the right to accept or reject the highest bid within a
specified time - anywhere from immediately following the auction up to 72 hours
after the auction's conclusion. The owner predetermines the price at which the
property will be sold. Obviously, the advantage is that the seller is not
obliged to accept a price other than one that is entirely acceptable. The main
drawback of such an auction is that many prospective buyers do not want to
invest the time and expense of investigating property when they have no
certainly they will get the property even if they are the high bidder. The high
bid is reduced, in effect, to an offer, not a sale.
bids can be taken prior to the auction and that sealed bid then become the
opening bid at an open outcry auction. The advantage of this method is that the
seller can gauge the market and interest on their property and make adjustments
up or down in their expectations.
What is A Buyer's Premium?
A. A Buyer's Premium is an additional charge to the purchaser of the property.
It is usually expressed in the form of a percentage of the high bid. The typical
buyer's premium in a real estate auction is 2% to 15%. You need to refer to the
terms and conditions the specific auction to ascertain the amount of the buyer's
premium. Your prospective buyer must consider the impact of the buyer's premium
when deciding on the amount to bid for the property.
The Buyer's Premium is an amount added to the high bid and incorporated into the
total selling price. The amount of the Buyer's Premium is announced prior to
each auction sale. There is no Buyer's Premium if the property is
purchased outside of the auction sale.
What Are The Advantages To The Seller In An Auction Situation?
A. Buyers come prepared to buy. Lookers are eliminated because most often
bidders must qualify through a deposit of certified or cashier's check. There is
a sense of immediacy an auction. Buyers feel that if all the properties are sold
before the auction ends it represents their last chance purchase a desired
property. Sellers get maximum exposure for their properties.
The Auction Marketing strategy differs from the conventional advertising. It is
more concentrated, therefore more intense and visible. High carrying costs are
avoided. Through auctions, the seller is in control and knows, that if properly
priced, the property will sell on a certain date, which is usually within 45-90
days from the auction listing. By selling quickly, the seller is able to avoid
high carrying cost such as insurance, real estate taxes, security and
maintenance and is also able to benefit from the use of the monies to reinvest
in other real estate or investment opportunities elsewhere.
What Are The Advantages To The Buyer In An Auction Situation?
The buyer knows the seller is fully committed to sell. Auction agreements
obligate the seller to transfer title to the highest bidder in an absolute
auction; the auction agreement obliges the seller to transfer title to the
highest bidder that meets or exceeds the reserve price in a non-absolute
offering. The buyer knows he is getting the property at fair market price. The
buyer feels comfortable with the purchase knowing that others would have been
willing to pay about the same amount for the property as the bid. The buyer sees
may offerings in the same place at the same time and is able to make market
comparisons quickly and easily.
How Can I Participate In This Real Estate Auction?
A. To be eligible to bid, a potential buyer must register with our office either
prior to the auction or the day of the auction. All bidders must post a
pre-determined amount of money in the form of a certified or cashier's check.
Contact our office for the amount of the deposit, as each auction sale is
different. If you are not the successful bidder, your check will be returned. If
you are the high bidder, your check becomes your deposit; you sign an agreement
of sale incorporating the auction terms.
Does The Owner Have To Take The Highest Bid That Day?
A. It depends. Almost all of our real
estate auction sales have "reserve" numbers that are determined by the
seller. The reserve number is not disclosed before the auction. If the high bid
the day of the sale exceed the seller's reserve number, then it is automatically
"confirmed" and the buyer must proceed to the closing. If the high bid
does not meet the seller's reserve number, the seller has 24 - 72 hours to
decide whether to accept the lower number.
What Is Meant By "Suggested Opening Bid?"
A. The suggested opening bid is the number that the auctioneer considers a fair
starting point for the oral auction. The suggested opening bid is not the
seller's "reserve" number.
If I Am The High Bidder, Is My Bid Contingent Upon Me Obtaining a Mortgage?
A. Not typically. Real estate auction sales are not usually contingent upon the
buyer obtaining financing. For most of our auctions, buyers are pre-approved by
a mortgage banker, mortgage broker or bank and know that they qualify for such a
purchase. Should the buyer not be able to obtain financing and not close on the
property, they forfeit the deposit money. Contact our office with any financing
If I Am The High Bidder, Is My Bid Contingent Upon Any Inspections?
no. Most real estate auctions are "As Is, Where Is, With No Warranties
Expressed or Implied." Potential buyers often have inspections done before
the auction. We will make the property available for any type of inspection. If
you want to bid on a home but only if it is with an inspection contingency,
please contact our office. The seller can make the decision to allow certain
Can I Purchase An Auction Property Prior To The Auction?
A. Absolutely. If a buyer makes an offer prior to the auction sale and it is a
price acceptable to the seller, the seller can decide to sign an agreement of
sale and the auction will be canceled. This is a common occurrence and not out
of the ordinary. The buyer in this situation can attach certain contingencies to
the agreement of sale. Contact our office for details.
Can An Auction Help Sell My Property?
A. In many
situations, an auction can accelerate the sale of your property by utilizing a
time definite sale date with an aggressive accelerated marketing campaign.
Would An Auction Help Sell My Property Quickly?
A. A typical
auction campaign runs 90 days or less and closes within 30-45 days.
Auctions are often referred to as accelerated marketing programs. One of
the main benefits of an auction program is the reduced holding costs of a quick
sale. A quick sale and closing also requires a quick move out by the
Can I Auction My Property If It Is Listed With A Broker?
A. Yes, talk to your broker about utilizing an auction to sell your property. A motivated broker can be very helpful with the auction
campaign. Remember, your Broker doesn't earn a commission until he sells
your property. If your listing is nearing its end, your Broker should be
exploring methods to accelerate the sale and earn that commission.
How Do I Choose An Auction Company?
A. The value and location of your property will be among the largest determining
factors in choosing an auction method and company. With auction companies
coming in all shapes and sizes, from the Trophy Auctioneer specializing in the
Luxury Market to the Local Auction Company that does it all, hiring an auction
specialist can be a daunting task. A professional auction consultant can
assist you in choosing the auction method that fits your needs at little or no
cost to you.
What Are The Terms In A Typical Auction Contract?
property is usually sold as-is, where-is, with all faults and NO contingencies
in the contract. The closing date is typically within 30 days after the
auction with 10% required as a deposit on the day of the auction. Due to
the intricacies involved in real estate laws, all sellers are encouraged to
consult a qualified real estate professional to assist them in the preparation
of their terms and conditions of sale and contract documents.
How Does A Buyer View And/Or Inspect The Property?
A. A prospective buyer should have ample opportunity to view and/or inspect the
property prior to auction. It is
recommended that sellers hold an "Open House" leading up to the
auction date, or make the property available for viewing at scheduled times. Please
contact our office to schedule a viewing time.
Should I Fix-Up My Property Prior To Listing It For Auction?
selling any real estate, improving the eye-appeal and condition of your property
prior to the auction can be to your advantage, depending on costs.
Remember, if you are selling your property "As-Is", you will still be
providing sellers disclosures of the property condition.
arrange a consultation or for additional information please call
Florabama Auction Services at call
Florabama Auction Services at (850) 995-7173 or
(800) 329-2577 or via e-mail
for a prompt response.