FREQUENTLY ASKED QUESTIONS FOR SELLER
- What are the advantages of selling real estate at auction?
- Why would a property successfully sell using the auction method if it did not sell using the traditional real estate listing method?
- Who is the ideal auction seller?
- How is a real estate property marketed?
- What does it mean when property is sold in "As-Is" condition?
- How does a potential buyer inspect the property?
- Is the high bid always the total amount paid for the property?
- Can the contract be contingent upon financing or inspections?
- What is the difference between an "absolute" auction and a "reserve" auction?
- What are the Terms and Conditions of Sale?
Q: What are the advantages of selling real estate at auction?
A: Selling real estate at auction allows the seller to dictate the terms of the sale. The property is sold on the seller's time schedule, not the buyer's. The buyer purchases a real estate property in "As-Is" condition so there is no negotiation process of contingencies, including financing. Eliminating financing contingencies gives the seller a far greater certainty of closing on an auction purchase contract. The auction creates a competitive bidding environment giving the seller the best opportunity to obtain the highest possible price and the current market value of the property.
Q: Why would a property successfully sell using the auction method if it did not sell using the traditional real estate listing method?
A: It is common that a property listed traditionally is unrealistically priced. When an asking price does not represent the current market value of a property, buyers are not comfortable making a lower offer. With an auction, there is no asking price so that problem is eliminated. In addition, the short time period for promoting a real estate auction provides the opportunity to expose the property to more people in a given target market. This typically is not possible in an open-ended traditional campaign.
Q: Who is the ideal auction seller?
A: The goal of a successful auction is to generate the highest possible sale price for the property in the shortest amount of time. The ideal auction seller is a seller who is motivated to sell the property and is ready, willing and able to accept market value.
Q: How is a real estate property marketed?
A: One advantage of auctioning real estate is the benefits of a customized marketing plan. The property is exposed to the widest possible buyer audience, increasing the possibility of a successful sale at the highest possible price. Using an auction marketing campaign, the property will usually be marketed separately, differentiating it from other property listings. In areas where multiple properties are for sale, the property being sold by auction will gain the most attention.
Q: What does it mean when property is sold in "As-Is" condition?
A: The material defects of a property, known to the Auctioneer prior to the auction, will be disclosed to all bidders. However, at a real estate auction, the Auctioneer does not make representations, guarantees or warranties as to the property's condition. The property is sold in whatever condition it is in the day of the auction. Buyers should conduct inspections prior to the auction in order to know the condition of the property on which they are bidding.
Q: How does a potential buyer inspect the property?
A: Typically a property is open for inspection during a series of open houses. Some sellers may choose to show properties by appointment only. Specific information will be available in the auction brochure and in advertising materials.
Q: Is the high bid always the total amount paid for the property?
A: Although not used in all regions or at all auctions, a buyer's premium may be added to the high bid to reach the final sale price. The buyer's premium is a percentage or an amount added to the high bid to determine the total purchase price to be paid by the buyer. For example, if the the high bid is $100,000 and the buyer's premium is 10%, then the buyer's premium is $10,000 ($100,000 x 10%). The $10,000 buyer's premium is added to the high bid of $100,000. The total purchase price on the property is $110,000. Closing costs, as applicable, are the sole responsibility of the buyer unless otherwise stated by the seller. Refer to the Terms and Conditions of Sale to verify if a buyer's premium and/or closing costs are applicable.
Q: Can the contract be contingent upon financing or inspections?
A: No. The auction contract is contingency-free. It is important that potential buyers inspect the property and arrange for financing before the auction.
Q: What is the difference between an "absolute" auction and a "reserve" auction?
A: An "absolute" auction (without reserve) means that the property is sold to the highest bidder, regardless of price. A "reserve" auction (subject to confirmation) gives the seller the right to confirm the high bid at the conclusion of the sale. Unless advertised as "absolute" and disclosed in the auction Terms and Conditions of Sale, auctions are considered to be "reserve" auctions.
Q: What are the Terms and Conditions Sale?
A: The sale is administered based on the Terms and Conditions of Sale of the auction. The Terms and Conditions of Sale provide information on the required deposit, closing date, etc. All bidders should become familiar with the Terms and Conditions of Sale prior to the auction. Note that at an auction sale, any announcements made by the Auctioneer on the day of sale take precedence over previously published or verbally conveyed Terms and Conditions of Sale.