GUARANTEED AUCTIONS

On guaranteed auctions, a price is set at a minimum point and

if it sells at a higher price, anything above the guaranteed price

will be split 50/50.

 

BUYER'S PREMIUM

Buyer’s Premium is a charge that the buyer pays that is added onto the winning bid. For example: If the buyer’s premium is 15%, then a winning auction of $100 would cost the winning bidder a total of $115.

 

AUCTION PREPARATION

Our firm offers turnkey service - that is, all the brokerage services

offered if the property were sold using the private negotiated

method - packaging, promoting, showing, helping draft legal

documents, conducting the auction from sale to closing.  We charge

for expenses, time, plus a commission  which is comparable to

rates charged for privately negotiated sales methods.

 

SHOWING THE PROPERTY

Members of our real estate auction company are skilled real estate experts in showing property at its best.  Particularly important is the auction company’s ability to anticipate questions the buyers will have regarding the real estate being auctioned. 

 

Information that must be available for any real estate auction

is anything pertaining to the property being sold, including operating statements, rent roll information, copies of leases and any

other supporting documentation.   

 

For industrial property information must include building plans, interior layouts, and loading capabilities. Regarding farm sales, important information needed would consist of future land development, surveys, soil samples, and crop rent information.

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FRAMING THE OFFERING

In an auction, the roles of the buyers and sellers are reversed. 

In a private setting, sellers normally set the price and the buyers

set the terms. In an auction setting, the seller frames the transaction

and the buyer, that is the market, sets the price on the basis

of the transaction the seller frames.

 

IT’S A QUICK SALE

An auction affords property owners the opportunity to dispose

of property now at today’s prices rather than tomorrow’s prices.  $190,000 or even $200,000 today is likely much more valuable than $225,000 next year. The time value of money is a major concern

to any seller. The abbreviated marketing time and the potential for

quick sale will substantially reduce the holding costs of the property, such as taxes, condominium fees, insurance and maintenance.

 

ADVANTAGES TO THE SELLER AT AUCTION

Buyers come prepared to buy. “Lookers” are eliminated because most often buyers must qualify through a deposit of a cashier’s check. There

is a sense of immediacy at an auction. Buyers feel this is their last chance to buy a desired property. 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 30-45 days of the auction listing. By selling quickly, the seller

is able to avoid high carrying costs and is able to benefit from the

use of the monies to reinvest in other real estate or investment

opportunities elsewhere.

 

THE CONTRACT IS SELLER-ORIENTED

The sales contract, which is written at the conclusion of the auction,

is seller, not buyer oriented. Due diligence during the inspection period is required by the buyer prior to purchase, as the property is sold “as is, where is” at auction. Further the buyer is approved for financing or stands to risk losing a great amount of earnest money (generally much more than required by conventional sales). No contingencies are allowed

and closings are scheduled within 30 days.

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ABSOLUTE VS. RESERVE AUCTIONS

An absolute auction simply means that the property is sold to the highest bidder. Absolute auctions guarantee a sale and attract high levels

of buyer enthusiasm and bid interaction, thus delivering the highest returns. The guaranteed sale makes absolute auctions the preferred method for financial institutions and government agencies. The seller, though, risks the highest bid winning the auction at a price point lower than his or her minimum desired price. A non-absolute auction takes away the risk for the seller. There are several variations that allow the seller to protect the minimum price to sell the property. First, the minimum bid auction is defined by having a minimum acceptable bid established prior to the auction. The auction only accepts bids

at or above the published minimum bid, and as such, limits the interest from bidders. Secondly, the reserve auction is defined by the establishment of a predetermined minimum sale price, and is not obligated to accept the sale if the highest bid falls below the reserve. 

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There are two types of reserve auctions, stated reserves and unstated reserves. Stated reserves are published prior to the auction. Unstated reserves are not made public and they are used when seller has

an acceptable range of values. If the highest bid falls into this range,

the seller generally accepts the bid. Lastly, the seller approval auction

is a variation of the reserve auction. In a seller approval auction, there

is no minimum or reserve. Instead, the highest bid becomes an “offer”, and then the seller has a predetermined amount of time after the auction (typically three days) to accept or reject the offer. If the seller accepts the highest bid, then the sale finalizes, if not, the bidder reclaims his

or her deposit and no sale is made. Real estate auctions typically use seller approval auctions for the flexibility and assurance against the highest bid being too low.