FREQUENTLY ASKED QUESTIONS
1. What is a Real Estate Auction Sale by Owner?
An Auction Sale by Owner a method or another mode of selling real estate. It is an intense and accelerated real estate marketing process that involves the public sale of property through open and competitive bidding.
2. What are the general differences between a Auction Sale by Owner and a Foreclosure Auction?
Generally, a public auction is for sale by owner. The owner is not in financial distress, but has merely concluded that selling his/her property via the auction process is the most effective method. As selling at auction moves towards further towards the main stream, more and more people are finding that selling their real estate at auction to be the best way to maximize value in a very timely manner.
A foreclosure, on the other hand, is a forced sale by creditors/banks. These auctions are sight-unseen and are generally held on the courthouse steps of whatever district the property is located. There are many more differences that are examined later in the FAQ section.
3. What do I need to bring to the auction in order to bid?
All that is required for a potential buyer to bid at all of our public auctions and foreclosures is cash or certified funds in the amount of the pre-determined deposit. Personal checks and letters of credit are NOT acceptable.
4. Are auction sales contingent on inspection?
All of our sales are on an "as-is" basis. There are no warranties as to the condition and/or the fitness of the property for a particular use. We encourage our buyers to do their due diligence prior to sale day for their own protection.
5.If I win the auction, what happens to my deposit money?
The deposit will count as a credit towards the purchase price of the property and placed in escrow. Please note; it is the purchaser's responsibility to obtain financing. If you plan to use a mortgage to purchase the property, we recommend that you apply for the loan immediately.
6. What happens if for some reason the buyer cannot settle on the property?
A well-conducted real estate auction by its very nature minimizes such failures. Failure to close can happen, but it isn't frequent. If the rare failure to close occurs, the auction seller can turn to the next highest bidders, who demonstrated their willingness to pay nearly as much as the buyer who failed to close.
If the buyer fails to settle on the property, he/she will be considered in default of the sales contract. In this instance, the buyer might lose all or part of their deposit and potentially be responsible for the cost of reselling the property.
7. When can I inspect the property?
For our public auctions the property is generally available for viewing prior to the auction.
8. What happens if for some reason the seller cannot settle on the property?
Our service contract states that the seller must be able to deliver free and clear title to the property without any liens or judgments. In the case that free and clear title cannot be delivered by the seller, the buyer will be refunded his/her deposit.
9. Who is responsible for closing costs?
The buyer is responsible for all closing costs, as stipulated in our contracts. Closing costs can include, but are not limited to title fee and recording costs.
10. What are the advantages to a seller in an auction situation?
There are 5 main advantages to a seller by having sell your property at auction:
i.Sell your property "as-is where is"basis.
ii. No fix-up costs or feasibility studies.
iii. No financing contingencies.
Buyers are prepared to buy. "Lookers" are eliminated because most often bidders must qualify through a deposit of a certified or cashier's check. Auction brings interested buyers to a point of decision. Buyers feel that if all the properties are sold before the auction ends it represents their last chance to purchase a desired property. Sellers get maximum exposure for their properties. The auction marketing strategy differs from 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, his property will sell on a certain date, which is usually within 30-60 days of signing the service contract. By selling quickly, the seller is able to avoid high carrying costs such as insurance, taxes and maintenance and is also able to benefit from the use of the monies to reinvest in other real estate or investment opportunities elsewhere.
Other benefits are:
i. Offers the seller another option.
ii. Creates competition among buyers - auction price can exceed the price of a negotiated sale. An auction generates excitement and heightens buyer interest.
iii. Accelerates sales - the property can sometimes be sold within six weeks of listing.
iv. Auction is a true market forum - the highest buyer pays the lowest price a seller will accept.
v. A seller knows exactly when the property will sell.
vi. A seller sets the terms and conditions of the sale, maintains control of the property throughout the auction (depending on auction type), and actively participates in the sale process.
vii. Auction reduces the time the property is on the market.
viii. Auction eliminates numerous and unscheduled showings.
ix. Auction takes the seller out of the negotiation process.
x. Auction is an aggressive marketing program that increases potential interest in and awareness of a property.
xi. Seller is able to obtain liquidity.
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.
12. I have property to sell, what expenses am I responsible for?
Adverting is the only cost to our sellers. When a seller signs our service contract there is a pre-determined advertising fee. The amount of the fee depends on the size of the property and the size of the necessary advertising campaign.
13. What are the benefits of selling your property at auction?
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 the assurance of watching the property's true market value emerge as the bidding process progresses. For both buyer and seller, fair market values for the property prevail. An auction creates competition among buyers and exposes the property to a large number of pre-qualified prospects. Because it is an accelerated sale, property can often be sold within 6 weeks of listing. For the agent, auctions can mean an increased client and customer base as well as increased profits.
14. Are all properties suitable for auction?
Most properties are saleable by auction. Residential property (including individual homes, condominiums, apartments and single-family homes), commercial property, vacant land are sold at auction.
15. If a property doesn't sell auction day 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.
16. 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 property's value. At auction, values settle at the level the market can bear, neither elevated nor deflated.
17. Who usually buys at real estate auctions?
Anyone can benefit from buying at a real estate auction. Many people who buy are first-time homebuyers who may otherwise be shut our of the real estate market. For them, the auction is a realization of a dream. Empty nesters and investors also comprise a large segment of the auction buying public.
18. How are properties usually advertised for auction?
This varies greatly depending on the type and value of the property being sold. One of the essential underpinnings 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 a 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 the market for the auction. 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.
19. What are the advantages to a 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 obligates 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 a fair market price. The buyer feels comfortable with the purchase knowing that there is a contending bid just one increment under the purchase price. The buyer has negotiating power. The buyer can withdraw from the bidding at any time until the gavel falls. The buyer sees many offerings in the same place at the same time. He is able to make market comparisons quickly and easily.
20. How long do I have to close on the property?
The time frame varies depending upon the type of property auctioned. Generally, our contracts stipulate a 30 day settlement from auction day to closing. Please see the specific terms for each auction to determine the length of time to close.
21. Why should real estate agents look favorably on auctions?
Increasingly, real estate agents are discovering the benefits of real estate auctions. They are realizing that auctions promote activity in an industry that thrives on activity. Agents can get involved in auctions themselves. If an agent brings a buyer to an auction, and that buyer purchases property, the agent can receive a commission. To ascertain the amount and structure of any commissions to be offered, refer to the particular terms and conditions of the auction contract. A single auction for one development might bring in dozens or even hundreds of prospective buyers who are now in the real estate agent's market area.
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