Frequently Asked Questions
Below you will find a selection of questions that can help you with your general questions about auctions for buyers and sellers.
A: Buying real estate at an auction is a very simple process. However, it is important for you to be informed and prepared prior to auction day. You should inspect the property during one of the scheduled preview dates.
Q: What is the asking price for properties?
A: All of our auctions are conducted utilizing the Open-Cry bid system. There is no beginning asking price. A starting bid comes from qualified bidders who attend the auction.
Q: What are the advantages of buying real estate at auction?
A: All of our auctions are Open-Cry type auctions, meaning that the auctioneer asks for each bid, and the bidders simply signal the auctioneer that they accept. Since this is open for everyone to see, there is an inherent honesty to the process. You are only competing against the other market bidders, and you will not overpay. Buying real estate at an auction allows you to experience a quick purchase and closing, to eliminate lengthy negotiations and to secure the market value was paid.
Q: Why are properties sold at auction?
A: The speed of the marketing process is the number one reason people choose an auction sale. Owners make a wise business decision to sell property in a one-day sale rather than continuing to carry costs associated with conventional marketing. Sellers are motivated to sell, and they offer buyers an opportunity to purchase desirable property at a substantial discount. Over 90% of properties offered at auctions are sold.
Q: How are auctions conducted?
A: Most auctions are conducted by open bidding. As a bidder, all you need to do is hold up your bidder card and call out your bid, or tell one of the bid assistants what amount you want to bid. The bid assistants are there to help you.
Q: Do I need to be represented by a real estate broker in order to buy at the auction?
A: No. We do encourage buyer-broker participation; however, it is not a requirement.
Q: Can I make an inspection of the auction properties prior to the auction?
A: Yes. All of our auction properties have an inspection date posted on the property page and in marketing materials. We strongly encourage you to view the property, as you will be purchasing it “As Is, Where Is.” However, properties that remain occupied by tenants are not typically shown. Vacant land properties may be viewed anytime without supervision; although, we will have a representative on-site on specific dates.
Q: Is financing available?
A: Some auctions have financing available, while others do not. See the information listed in your specific auction catalog to determine this.
Q: How long do I have to get financing after the auction?
A: If financing is required to complete a purchase, we suggest you arrange and pre-qualify with a lender prior to the auction date. If you fail to pay the balance due by the closing date, you forfeit your bid deposit.
Q: What is required in order to bid at an auction?
A: You must register with a valid ID (Driver’s License) on auction day and receive a bidder card in order to bid. If you are the highest bidder for a property, you will be required to make a bid deposit on auction day. This amount is posted on the property page of the web site and in the brochure.
Q: Can I buy more than one property?
A: Yes. You just need to bring and present a separate check for each property you intend to purchase.
Q: What does “absolute auction” mean?
A: Real estate being sold “absolute” means the property will be sold to the highest bidder, regardless of the high bid price.
Q: What do the terms reserve and absolute mean?
A: An auction where the property is being sold with a reserve means that the property is being sold subject to seller confirmation. We try to make sure that the reserve is reasonable and that the seller is very motivated to sell at the high bid achieved, regardless of the reserve amount. When a property is being sold absolute, it will be sold to the highest bidder regardless of the price.
Q: Before closing, do I have to make any additional deposits other than my bid deposit?
A: No. The bid deposit is a non-refundable deposit, and it is usually an amount that we feel comfortable will assure the buyer will close. The bid deposit is held in escrow and is deducted from the total purchase price, equal to the bid amount plus the buyer’s premium.
Q: What happens once I have become the successful high bidder?
A: You will move to the contract table where you will present your check for the bid deposit and complete the sales agreement.
Q: What is a buyer’s premium?
A: A buyer’s premium is a percentage paid by the buyer and added to the highest successful bid to determine the final contract price. If a premium is being utilized, it will be detailed in the auction catalog.
Q: To whom do I talk to if I don’t understand the auction contract?
A: It is very important for auction buyers to be educated and informed regarding the auction process. Make sure all your questions and concerns are answered before you attend an auction. The contract is available by contacting our offices. Feel free to have your legal advisor review the contract prior to the auction date.
Q: Is my deposit refundable if I change my mind after the sale and decide not to buy the property?
A: No. If a buyer does not close for any reason on or before the closing date, the initial deposit is automatically forfeited.
Q: When and where are closings held?
A: Closings generally occur within 30 days after an auction. Since the seller typically pays for title insurance, a company has been selected and will be provided to you in the contract room.
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 non-distressed—through open cry, competitive bidding.
Q. Why should I sell my property using the auction method?
A. For sellers, there are many advantages that are built into the auction process, but the number one reason is the speed of the marketing process. You are able to sell your property quickly, receive a fair market, no-contingency contract and usually close in 30 days.
Q. What types of assets do you auction?
A. Primarily real estate. We will offer to sell equipment if the real estate is being sold as well. We auction all types of real estate from condominiums, single-family homes, land (agricultural and timber), commercial and investment properties and high-end trophy properties.
Q. My listing broker has had no previous experience with auctions. Will this impact my results?
A. No. Our auction staff is composed of specialists who deal with this situation daily. We will work with your broker throughout the entire process. Ultimately, the auctioneer manages the auction process, and the broker gets paid without having much to do with the process.
Q. Do I have to sell my property to the highest bidder?
A. The best way to sell is to auction the property absolute. This guarantees you are going to sell, and this creates a much greater interest with potential buyers. It attracts purchasers from the broadest geographic region because buyers can justify their time and efforts to inspect, bid and buy, knowing there is no question that the property will be sold. You may also choose the reserve method, a set secretive price, which the seller will not sell below. The seller has the option to accept any bid at the auction, whether it meets the reserve or not; however, a reserve will keep some bidders from attending and performing the necessary due diligence to buy the property. The decision to sell absolute or reserve should be discussed in detail with your sales associate or auctioneer.
Q. How is the property marketed?
A. A detailed marketing plan is developed by the auctioneer and is presented to the seller for approval. Generally, the marketing plan includes direct mail, local, regional and targeted print advertisements, our web site and other marketing avenues that may include radio and/or television.
Q. Does “As Is” mean I don’t need to disclose any known defects?
A. There is no seller’s disclosure form for you to fill out: however, if there are any blatant defects, ethically we must disclose these to potential buyers. This does not include normal wear and tear items or any problems that occur after the closing.
Q. What if the property is priced below the market right now?
A. Often, we find that the price is not the reason why a property isn’t selling. It usually has not been marketed effectively, and therefore, the property has experienced insufficient exposure. In other words, it has become stale. The auction process is the best way to revive interest and create urgency in the marketplace to obtain offers at current market value.
Q. I am not in financial trouble, should I be concerned about what people might think if I hold an auction?
A. You are not alone in your concerns. Many people are afraid of the old, outdated perception of auctions. There are great differences in the marketing of a voluntary, by-choice auction versus a distress auction. Our auctions are positive, enthusiastic events designed to generate competitive bidding and to provide immediate results for both seller and buyer.
Q. I am concerned about the net amount I’ll receive from the auction because I have a mortgage. What advice do you have to offer on this?
A. This is part of the interview process during our first meeting. Please keep in mind that we will be your agents and will have a fiduciary responsibility to represent your best interest. A part of that process is to help you decide if the auction process is best for you. We understand your concerns and your need to cover an existing mortgage on your property. On auction day, the market will determine what value is acceptable for your property. The fact you are doing an auction does not change the market value of your property. In short, if the true market value is at a level below your existing mortgage, then that is the price you have to work with regardless of whether you use the traditional method of sale or the auction method.
Q. Where will the auction be held?
A. We hold all auctions on site or in a central meeting facility, depending on the needs of the seller and the number of properties being offered at once.
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