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Real Estate Auctions

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What You Need to Know About Auctions

Auctions are not just for distressed properties. In the nineties, the Resolution Trust Corporation (RTC) used auctions to move commercial and residential real estate assets from failing banks to the buying public. As a result, many buyers and sellers realized the auction is a viable method to move real estate in a timely and efficient manner. Auctions have been used as a method of matching as many buyers as possible to the sale of a property for close to one hundred years. Auctions are another method of marketing. Traditionally, most auctions are held on-site, although the current trend is for bidders to submit offers remotely. In that case, some argue that the momentum of the auction is less effective. Auctioneers must be licensed by the HTUGeorgia Auctioneers CommissionUTH and the Georgia Real Estate Commission if they intend to auction any real estate. Auctions can be held for personal property as well as real estate. An estate sale by auction of personal property may be beneficial before listing or even auctioning a house. Commercial real estate is also actively sold at auction. As is the case in many specialties, terminology is specific to the industry. When attending an auction, you and your client must clearly understand the terms as well as how the property is being marketed and sold. Usually, the sale does not permit contingencies to the purchase other than good title; so the winner of the bid commits to buying the property.

The following terms are critical in that understanding.

Absolute: If a property is offered "absolute," the property will be sold

without a set minimum price. In other words, the property cannot be taken off the market if the owner does not like the price. It will sell for the highest of the bids given at the auction. Often, by advertising absolute, more buyers attend and the sale price is higher than those properties not offered absolute.

Buyer’s Premium: Whenever a bid is placed, a commission is added to the offer price to cover the fees to the auctioneer. The total price the buyer will pay is the bid price plus the buyer’s premium.

By the Tract: Each tract is sold separately or it may be announced that the tract will only be sold as a whole.

Crier of the Bid: The auctioneer begins and controls the bidding process so that the bidding is done fairly and openly.

Ringperson: The auctioneer has ringpersons who assist the attendees in making a bid or obtaining information.

With Confirmation: The auctioneer must receive

confirmation from the owner that the winning bid price and terms are acceptable.

With Reserve: When advertised and sold "with reserve," the owner reserves the right to accept or reject a bid based upon a set minimum price he/she requires to sell the property. The minimum bid does not have to be stated. A real estate licensee can attend an auction with a buyer/client and register the client to obtain a small percentage if the client wins the bid and subsequently closes on the property. Some real estate firms have a separate auction company for commercial as well as residential sales. A real estate agent could possibly obtain a referral fee for sending a seller/client to an auction company if the property sells as a result of the auction. When a seller receives the proceeds from the auction sale, the real estate licensee can assist him/her in buying another real estate investment.

Sellers who are frustrated with purchase agreements filled with contingencies and extensions to closing may find that in some circumstances an auction is a preferable method to quickly turn assets into xash.

If you are interested in locating an upcoming Real Estate auction, please contact us and we'll be happy to assist you.

For additional information contact US Home Auctions