COMMONLY ASKED QUESTIONS ABOUT REAL ESTATE AUCTIONS
What are the advantages of listing real estate using the auction method versus traditionally?
When you list your real estate through the “private treaty method” you are publishing a sale price and competing with hundreds and even thousands of other properties. This means you can easily under price or overprice the property, you loose either way. By guessing at value you will either sell too cheap or your property will set on the market and become stigmatized all while you continue to pay the carry costs; mortgage, taxes, insurance, and maintenance. All the time marketing, showing and negotiating with only one buyer at a time. With the traditional listing process it is the buyer’s interest that is protected. Even after the purchase agreement is signed the buyer will have the home inspected, the seller will then need to make costly repairs or lower the agreed upon selling price. After the inspection there are mortgage qualifications, and additional mortgage inspections of the property. At anytime the buyer can back out of the deal, leaving the seller with additional costs and time wasted. The auction method creates urgency, a reason to buy today! With auction marketing you are bringing many qualified buyers together on your terms; property sold as is with closing to take place within 30 days without financing or inspection contingencies. You set the time and date the property will sell, bringing together multiple buyers who competitively bid, producing top market price. Only at auction can you get more than you asked for your property.
What is “fair market value”?Fair market value is the price for which property sells for on the open market between a willing buyer and a willing seller. At auction you can separate your property from all the others by creating excitement and bringing many qualified buyers who bid against each other, creating maximum return for the seller. Selling on the date you want to sell and with the terms you want.
What types of properties are sold at auction?
Every type of property, sold one at a time or in groups. Fixer uppers to luxury residences valued in the millions. Farmland, lots, multi-family properties, pre-construction, commercial, retail, industrial, and even entire islands.
How do I know if my property is right for auction?The ideal seller for the auction method would be a motivated seller who wants to control the time table and terms of sale who owes less on the property than current market value.
Can I auction my property if I have a mortgage, liens, or taxes owed?Yes, most sellers have a mortgage or other liens. Your liens will be paid at closing. You should require that your real estate auction company will handle all settlement through a licensed title insurance closing company.
What type of real estate auctions are there?You can sell your property as “absolute”, “seller approved”, “reserve”, or with a “stated minimum bid.”
What is absolute auction?Property sold at absolute auction means that it is selling to the highest bidder regardless of price. There is no minimum, and the seller cannot reject the highest bid. This type of auction often produces the highest selling price.
What is a seller approval auction?It means the property is being offered to the highest bidder, subject to the seller accepting or rejecting the bid.
What is a reserve auction?This means there is a minimum acceptable bid the seller has set prior to the auction. The property cannot be sold unless this amount has been reached or exceeded.
What is a stated minimum bid auction?This is an auction were the seller publishes a minimum acceptable bid prior to the auction and will sell the property at that price or higher.
How does the auction company get paid?The buyer pays our commission in the form of a buyer’s premium. The seller receives 100% of the highest bid. The seller is responsible for the marketing expenses.
What is a buyer’s premium?
A buyer’s premium is a percentage of the highest bid paid by the buyer. The total sale price will include the highest bid plus the buyer’s premium. At closing the seller receives 100% of the highest bid.
How long does it take to sell real estate at auction?
This can vary, but full service professional real estate auction companies should be able to go from initial agreement to marketing, conducting the auction and closing within 60 days. This includes a period of 3 to 4 weeks prior to the auction for marketing prior to auction day, and all settlement and closing will take place in 30 days or less from the hammer drop.
How will you market my property?A proper marketing plans include; signage, web listings, on-line bidding, emails campaigns to pre-selected auction buyers, faxes, and brochures. A national, regional and local newspaper campaign for two to four weeks prior to the auction date. Brochures are mailed to neighbors and local REALTORS®. A properly conducted marketing campaign creates urgency and brings highly motivated and qualified buyers to compete for your property.
Where is the real estate auction held?Usually real estate auctions are held at the property location.
Can I come to an auction just to watch?Absolutely, AUCTIONEERS encourage you to attend an auction and watch the bidding. You will be entertained and surprised at the interest an auction generates.
How do I know bidders are qualified to buy my property?Bidders must meet criteria to register. (1) Valid identification, such as driver’s license. (2) Agree in writing to the terms and conditions of the Tower Auction Company.com auction. (3) Submit proof of funds. (4) Deposit of down payment in cash or certified check. (5) Successful bidder will sign a non-contingent purchase agreement agreeing to the sale price and closing within thirty days. If the buyer fails to comply he forfeits his down payment and agrees to pay a fee to re-market the property and all legal fees. It is extremely rare for a buyer to default.
Will I need to sign an agreement to sell my property at auction?Yes, you will sign a real estate auction listing agreement.
What paperwork will I need to sell my property?You will need copies of your identification; driver’s license or state ID, deed, survey, tax ID number of property, and recent tax bill, and mortgage payoff amount.
Will bidders be able to view my property prior to auction?Yes, most auctioneers offer free previews by appointment and conduct scheduled property previews prior to the auction. We strongly encourage bidders to examine the property before the auction date. Normally the property is available two hours before auction time.
What can I expect on auction day?A full service professional real estate auction company will provide a team of auction professionals. Cashier, security, bidders assistants; ringmen, all led by an experienced licensed auctioneer. We will open the auction with the rules and terms of the auction, followed by a description of property to be sold. Once the auction begins we work with buyers to obtain the highest possible bid. Immediately after the auction contracts are signed, non-refundable down payment collected, and you are on you way to closing.
When and where does the closing take place?Your closing will be held at a licensed title company. Here the seller receives final payment less any liens, mortgages and buyer receives a warranty deed and title insurance for the property. This takes place within 30 days or less of the auction.
Is the closing any different than any other real estate closing?No, the closing is the same. Once the price is agreed upon and contracts signed the closing is held in the customary manner for any transfer of ownership.
For more information, contact Tower Auction Company at 317-333-6977, or by visiting them on the web at www.TowerAuctionCompany.com .
*Contact Information:
Douglas Hostetler
Tower Auction Company
3208 W. 16th Street
Indianapolis, IN 46222
Phone: 317-333-6977
Email: info@towerauctioncompany.com
Web: http://www.towerauctioncompany.com
*This article may be freely reprinted and redistributed as long as this paragraph remains intact.