What are some benefits of auctioning my home instead of going the classic real estate sale route?
There are many advantages. Here are some:
- Close quickly! - Houses sold by auction usually close within 30 days of the sale. This reduces "carrying costs" for keeping the house on the market.
- You Know the Date of the Sale! - You will know the exact date and time that your house will sell in advance.
- No Annoying Contingencies! - Properties sold at auction are sold "where is as is" with no contingencies. The sale is not contingent on inspections, financing or anything else other than a clear title.
- Low Commission Rates - The commission earned by the Auctioneer is split between the buyer and seller and the percentage paid decreases as the sale price increases. Sellers will never pay more than 2% commission and often will pay less..
- Reserve Price Protection Available - A "reserve price" can be set which guarantees that the property will not be sold for less than a predefined amount.
- Bidders are pre-qualified and prepared to buy - Bidders must provide a deposit in advance of the auction which is kept by the seller (minus a small auctioneer fee) if the sales does not close as expected, which is a very rare occurrence.
- Buyers compete against each other to drive the price up not down! - An auction provides an exciting competitive atmosphere. There are no "hidden bids" and no guesswork as to who has provided the highest bid.
If I buy a house at auction, how much money do I have to provide up front? Do I have to come up with all the money right away?
Although you will need to check the specifics on a particular auction, usually you must bring $5000 in the form of a cashier's check, certified check, cash or other form of guaranteed funds to qualify to bid. Some auctions may require a larger or smaller deposit, depending on the value of the property and other factors. You will usually make the check out to yourself and sign it over to us if you are the successful bidder. Checks will be returned to all unsuccessful bidders at the conclusion of the auction. In most cases, you will be required to bring the deposit amount up to 10% of the total sales price within 3 business days. That payment can be done with a personal check or other form of payment and does not need to be a certified or cashier's check. The remainder of the balance due must be paid at closing. Some people think that you must bring the entire sale amount to auction. Although this is sometimes the case in tax auctions or Sheriff Sales, it is not required at our auctions.
How quickly will my property close after the auction is complete?
Most property closings take place within 30 days of the sale, as long as a clear title can be obtained with no defects.
Am I obligated to accept a low offer on my property?
We will work with you to help assure that your property sells at an appropriate price. You always have the option of setting a "reserve" price so that only bids above that price will be accepted. Our goal is always to obtain a realistic market value price for the property. There are advantages and disadvantages to having a "reserve" price and we are happy to discuss those options with you to determine the path that is best for your needs and that you feel most comfortable with.
How does the auctioneer get paid their commission?
The auctioneer's commission is a combination of the sales fee percentage paid by the seller and a "buyer's premium" paid by the buyer. The amount of commission paid by the seller varies by the final sales price. For properties that sell for $100,000 or less, the commission from the seller usually will be 2%. The percentage paid decreases as the sale price increases. The percentage paid by the buyer also generally decreases as the sales price increases. The only other expense that the seller is responsible for is the advertising and publicity expenses related to promoting the property. We always review the marketing plan with the customer and only proceed once everyone is in agreement. Marketing expenses for most properties are between $200 and $900, depending how/where the property is advertised.
How do people inspect the property?
We generally hold one to two open houses 1 to 2 weeks before the scheduled auction. If the property is unoccupied, we also will arrange viewings by appointment. Bidders are also welcome to look at the property an hour before the scheduled auction time. You will know well in advance the day and time of the open house so that you can prepare for it. Unlike conventional real estate sales, you will not be contacted by individual real estate agents to show the house at inopportune times and there will generally be no lockbox on the door.
Aren't auctions only for foreclosures, tax sales and the like?
Not at all! Certainly banks, financial institutions and municipalities have used the auction route to sell problem properties but that is mainly because they recognize that it is the quickest, easiest and most effective way to sell the property. Properties of all types are sold by auction every day. In fact, multi-million dollar homes are one of the fastest growing sectors of the real estate auction market because their owners realize, it is one of the most effective ways to attract a diverse pool of buyers and sell the property quickly.
Does the seller need to be present at the auction?
You do not need to be present unless you wish to be. However, some sellers wish to be so that they can see the excitement of the auction event. in addition, a seller may choose to accept a lower bid than their reserve, especially if the top bid comes close to their desired amount. If they are present, they can approve the top bid before the auction concludes.
What if my property doesn't sell at the price I want? Do I still need to pay a fee?
Although we always strive for a successful sale, we may not receive enough bids to make the sale viable. In most cases, if that does occur, the only expenses you are generally responsible for are the marketing expenses. In most cases marketing fees (which pay for advertising), are less than $900. The charges for a Foreclosure auction are different and those do have a no sale/administrative fee of $400 billable to the foreclosing entity if no sale is made. All fees are agreed upon before you sign the contract. Also, we usually will forward you all sales leads if the auction is unsuccessful in case you wish to follow up with them to facilitate a private sale or a sale facilitated by a real estate agent/broker.
What kind of people buy properties at auction?
All kinds but most people who attend an auction are looking for a good deal and want to forego the negotiations and long processes that are often part of the classic real estate route. It is also true that auctions often attract investors, construction companies and "flippers" who arrive cash in hand, ready, willing and able to buy with the intention of rehabbing and reselling the property at a later date. In any case, auctions attract motivated buyers who, just like the sellers, wish to close on the property quickly and with a minimum of hassle.
So..does your company work for the Seller or the Buyer? Or Both?
We work for the Seller and we are always striving to get them the best deal possible for them. With that being said, we are extremely transparent and provide Buyers or potential Buyers as much information as possible. We strive to answer any questions potential bidders have about the property quickly, accurately and honestly. While we cannot reveal certain information (such as a buyer's reserve amount if they wish to keep that secret), we are legally obligated to reveal any property defects that we are aware of.