Auction Frequently Asked Questions:
> What Happens On Auction Day?
Q - What is a real estate auction?
A - A real estate auction is an increasingly popular way to buy or sell real estate. A real real estate auction sells your real property in weeks, not months or years.
Q - Why should I sell or buy real estate through an auction?
A - A real estate auction is beneficial for all parties. For the seller, a real estate auction is a way to sell property at an accelerated pace; it guarantees a sale date without contingencies. The inherent efficiency in the auction process enables the seller to eliminate long term carrying costs, including maintenance, real estate taxes, interest and insurance. The competitive bidding atmosphere of a well designed and executed auction campaign gives the buyer an opportunity to purchase property at a price they establish, but only first after having "competed" for the property.
Q - What are the elements of a successful auction?
* A careful investigation of the property contemplated to be sold at auction. Not all properties are good auction candidates.
* A well thought out, professionally prepared auction marketing campaign targeted to bring maximum exposure of the property in its best light.
* Professionally designed auction brochure, advertisements and signs.
* Due diligence packages necessary to give prospective buyers answers to their questions so that they can bid freely.
* The selection of the form of the auction that best represents the needs of the seller and the property being sold at auction.
Q - What are the different forms of auctions?
A - There are two forms that an auction can take: "absolute" or "confirmation". At an absolute auction, the real estate sells to the highest bidder without minimum or reserve. At a confirmation auction, the seller has the right to accept (confirm) or reject the last bid price at the auction. The form of the auction depends on a number of factors, including market conditions such as location, declining or appreciating market, physical condition of the property as well as financial constraints such as mortgages and liens. Our recommendation of the form of auction is based upon years of experience in this marketplace and our commitment to bringing you the top market value for your property.
Q - What is a buyers premium?
A - The buyers premium is an additional charge added to the top bid price. Typically, the buyers premium is a ten percent (10%) premium added to the last bid price. For instance, if the last bid price is $100,000.00, the buyers premium is $10,000.00 and the total contract price is $110,000.00. The buyers premium is used to defray the cost of the auction for the benefit of the seller. The buyers premium may be used to pay the advertising expense of the auction, buyer broker participation as well as the auction company's commission.
Q - How long does an auction take?
A - For the best auction results, approximately four (4) to six (6) weeks is needed to properly promote and expose the real estate to the marketplace.
Q - What if nobody shows up?
A - It just doesn't happen to us. When we conduct your auction, our veteran staff of real estate specialists have taken the necessary steps to prevent a "no show" outcome. We use direct mail, internet, personal invitations, and newspapers as our marketing tools.
Q - What if nobody wants my property?
A - We hear this occasionally. The truth is that many buyers exist for all properties. When we are employed to sell your property at auction, true market value is attained. Buyers come to our auctions and bid competitively for your property.
Q - What day of the week should my auction be on? Should my auction be scheduled on a Saturday?
A - Maybe, but not necessarily. Saturday is an active day for many events in South Florida. A weekday afternoon or early evening may be more effective. Our auction proposal, which is provided to you free of charge, will include a recommendation of the day, date and time for your sale.
Q - If I have an auction, will everyone think I had to sell?
A - Auctions are not last ditch efforts. The most savvy of sellers actually prefer auction marketing and frequently select the auction method of marketing as the best method of sale. Using the "time value of money", an auction sale price today may be worth more than waiting for the right buyer in a negotiated sale in six months or a year especially after deducting carrying costs and interest.
What Happens on Auction Day?You should arrive at the auction site at least 30 minutes prior to the time of the auction. By doing this, you will have plenty of time to look at the property information, ask questions, review materials and register with the auctioneer.
Don't be late as a real estate auction can be over in a matter of minutes.
All prospective buyers must register in order to bid, although there is no obligation to bid at an auction because you have registered.
To register, you will need to provide evidence that you have the earnest money deposit required to bid. The earnest money deposit must be in the form of cash, certified check or bank/cashier's check. Check in advance to see what that amount will be and what other financial arrangements must be made in advance. A valid driver's license or other acceptable form of identification is also required.
See the Terms and Conditions of each sale to obtain the specifics as to the deposit requirements for the property of your interest.
A Word of Caution:
A growing number of people are looking at new ways to get onto the property ladder. Many are buying with friends; some are asking their parents to act as guarantors on their mortgages for permitting them to buy before prices get even higher, while others are looking to buy discounted properties at auction. Make sure you know the cost of similar properties in the neighborhood. It might seem eccentric to hear this from us, but buying at an auction can sometimes be a smart move, particularly if you secure a property for 10%-30% less than its open market value. Property auctions are not for beginners.
Experience of property is vital before you turn up at an auction, so if you do not have any either take along someone who does, or stay well clear. If you are determined to buy at auction, it goes without saying that you should know the area you aim to buy. You should also have studied the brochure on the property you like in depth and have visited it in person. Make sure you know the price of similar properties in the neighborhood and always try and find out whether the property you are interested has been on the market and also be sure that properties are with local estate agents. If an agent had it on their MLS for nine months and still could not sell it, there may be something drastically wrong, so you know that a full structural survey will be required. If you are still keen after viewing and your initial research, you may choose to hire a lawyer to carry out searches and sometimes even check the title deeds for any restrictions or problem areas. This can be quite an outlay when you cannot even guarantee your bid will be successful along with the survey.
It is necessary to set a price limit before you start bidding at an auction itself as well as easy to get carried away when bidding so always bid with your head, and not with your heart. In case if your bid is successful, you will be asked to sign the contract in the "sale room" afterwards and be asked to pay a deposit, usually of 10% and a "buyers premium" of 10% of the sale price.
