Frequently Asked Questions about Real Estate Auctions
Why do real estate auctions work?
One factor is auctions have a deadline. That’s right, a deadline. The deadline creates urgency. A FOR SALE sign does not have a time line for potential buyers to submit offers. The deadline or auction date and time mean that if a buyer has any interest in purchasing your property they must do so at the designated date, time and place that the sellers choose!
What are benefits of selling real estate at auction?
The costs of maintaining real estate, labor costs for maintenance, insurance, debt service, taxes and time and travel to the property and other expenses related to owning assets will cease at the completion of the auction and the closing.
Can I be assured of getting the best price for real estate at auction?
At the auction you get competing offers all at once! Each bid is simply an offer to purchase or offer to buy. The sales price is determined by competing bids that go up, not down. A well promoted real estate auction should result in the best price.The price bidders pay at auction is solely at their discretion and on what buyers will pay in a competitive bidding format at that specific time, under the terms of the auction, and a host of other influences on the bidder. Sometimes economic conditions favor buyers, sometimes sellers.
Do I have to sell if I get a low price?
The answer depends upon the type of auction you have. Many auctions today are conducted under what is called “Absolute Auction”. With an Absolute Auction the seller must sell to the highest bidder. Consequently, some of the most successful auctions are Absolute Auctions. Our auction professionals will advise you whether or not an Absolute Auction is right for you. Auctions can be conducted with “Reserve”. An auction with reserve gives the seller the opportunity of refusing the high bid. Many real estate auctions are conducted with reserve.
What are the seller’s responsibilities in a real estate auction?
The seller’s responsibilities will be similar to those in any real estate transaction. Examples are:
- Provide the auction company with title information
- Provide the auction company with property descriptions
- Provide the auction company with appraisals, surveys, etc.
- Provide details about existing mortgages and liens
- Provide marketing expenses
- Provide information about previous attempts of marketing and the results
- Make disclosures of known defects
- Make the property available for showings or previews
- Seek advice during the process from your auction professional
- Refer all inquiries to your auction professional
- Provide closing assistance
- Be realistic about the value of the property
How do I know what type of market to sell in?
Your auctioneer will advise you on the best type of market to sell in. The fact is you have to sell in whatever type of market conditions that exist currently. The good news is that auctions work in most markets.
- Slow markets - auctions may create the special focus your property needs
- Hot markets - auctions can prevent you from under selling in hot markets
- Changing markets - new developments, shifts in the economy, and more.
What does the auction company do?
- Determines the objectives of the auction sale
- Uses an automated tasks management system for quality assurance
- Auction professionals inspect the assets for auction
- Meets with planning and development offices, planning boards, surveyors, attorneys and potential buyers to prepare for a real estate auction
- Tours the local community and neighborhood
- Works with you to determine selling features
- Works with an advertising agency to create a unique marketing plan that may include local, regional, or national media, radio, brochures for direct mail, trade journals, signs, Open houses or previews, websites, social media, and email campaigns
- Provides the seller with leads, inquiries and other marketing results
- Provides the seller with proof of auction marketing including all electronic medias
- Prepares an auction catalog of assets for auction
- Photographs and videos of the real estate for auction
- Handles all inquiries to free up the sellers time
- Works with the seller to determine what is the best auction day location
- Conducts the auction with an auctioneer, online bidding or both
- Assist in follow-up and closing the transaction
- Works with the closing attorney of title company
How Long Will It Take To Prepare For An Auction?
In most cases 4 to 8 weeks are needed.
When Will I Get My Money If I Sell At Auction?
This is determined in the auction listing contract but it will typically be 2 to 4 weeks after your auction sale.