The most common questions I get about buying at one of our auctions is: "How does it work?" Auction law varies from state to state, and buying at auction requires additional preparation, but there are some things you need to know before bidding on a property at auction.
1) Read the terms and conditions of auction carefully, and make sure that you fully understand the information contained therein. You agree to the terms and conditions of the auction when you register to bid. These are binding, and if you are the successful bidder, you are obligated to perform according to the terms and conditions of the auction. The terms generally include important information like:
a) Is there a buyer's premium, and if so, how will it be paid?
b) How much down-payment , and in what form, will be required on the day of auction? Is the down payment refundable under any circumstances?
c) How long do you have to close the property?
d) In what condition will the property be delivered?
2) Inspect the property before you bid. After the auction, it is usually too late to uncover defects in the property. It is the responsibility of the buyer to inspect the property prior to the auction, and make determinations as to the suitability for the buyer's needs.
3) Get an actual copy of the sales contract prior to the auction. This contract will become binding as soon as the gavel drops, so be aware of all the language in the contract.
4) Have your financing in order. There are generally no contingencies in auction, including financing. Be sure that you have the financial ability to pay for the property at closing.
5) Use the services of a real estate agent experienced in auction. A skilled agent can assist you with the documentation, provide CMA's and other local information, and help you structure a successful bidding strategy. This is no arena for the timid or weak, be sure to be prepared and hopefully, find a great buy!
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In some situations Auctions can be such a great way to go. Marketing is the key here. Without enough buyers bidding on the property success can be tough to come by.
I haven't sold any of my clients houses yet at auction, yet I know that it is a possibility in the future.
Thanks for the great information!!
Christopher....
Go to some auctions on your own and get a feel for them before you bid on anything!
Chris...
Right you are. Auction is ALL about marketing!
William...
Believe it or not, I agree with you! Read my blog on: I'm and auctioneer, and I don't recommend auction for most buyers..."
William...
You're welcome. Auction works well in many circumstances, but nit for everyone every time!
Richard
Most people attending auction are bottom fishing and not really good buyers.
Edward...
It's true that a lot of buyers are looking for something for nothing, but there are times when a property is so desirable that it is possible to obtain a higher price at auction than by conventional means of selling!
Edward... "Most people attending auction are bottom fishing and not really good buyers."
The largest home auction in history just took place in January of this year in California...over 10,000 in attendance, over 350 homes SOLD in just 1 day.
A lot of bottom fishers if you ask me.
Robert ....
What did the properties sell for compared to appraised value? I can sell any property at 50 or even 60 cents on the dollar. However, there's a notion out there that Auction will bring appraised value or more, and that isn't happening right now!
The fact that it WAS THE LARGEST HOME AUCTION IN HISTORY tells you everything you need to know about the market!
And how many homes in CA sell on an average day? Those numbers don't mean anything unless we know the entire story!
Thanks for the comment though, I wish I had a piece of that auction!
Richard
I was told most properties were bringing 60 yo 70% some 80 and some even 90%. By the time the negotiations end on traditional sales here, I would love it if I could be at 90%. Concerning the notion that the Auction Method will generate the appraised value. I have never heard that. As Auctioneers we never claim that. We bring the highest bid price on auction day...present it to the Seller and say "Make a decision....do you want Fair Market Value for your property or do you want to walk away." Public Auctions will bring Fair Market Value. Period. No court in the land will argue against that. I have said this a million times to my clients, Brokers, Agents, etc. Auctions are not meant for every property. Some Auctioneers in my local market believe they are and will book everything under the sun. It is up to a Professional Real Estate Auctioneer to help determine if it is a viable method or not. With over $25 Million in Auction Sales last year....I must be doing something right!
Good morning Robert!
I agree, that in a well advertised auction, we ALWAYS get true market value. There is nothing more accurate than a competitive bid on price, with all other things being equal. As an auctioneer, I truly believe that! However, I think that most sellers think of the "appraised value" as "market value, " which you and I know from experience, is rarely the case!
Even though we clearly state the terms and conditions of our auctions, buyers often feel like they have been misled, or they get in over their heads. As you well know, our databases of experienced auction buyers are our most valuable asset.
And you're right about the selection process. I don't want to waste my clent's time, and more importantly, I don't want to waste MY time on properties that won't sell at auction! I do admit though, I have become EXTREMELY selective recently!
I do congratulate you on your success, I'm certain that I could learn a lot from you! And if I have any referrals for your area, I will send them your way! Thanks for your well thought out and sincere comments! I appreciate it more than you will ever know.