Real Estate Auctions
A real estate auction is an innovative and effective method of
selling real estate. It is an intense, accelerated real estate marketing
process that involves the public sale of any property – including those
that are nondistressed – through open, competitive bidding.
This page contains information reprinted from the National
Association of Realtors that will give you more background on this
exciting way to sell a property.
Auctions are win-win for everyone
Here a just a few benefits of real estate auctions:
|Benefits for the Seller
||Benefits for the buyer
- Quick disposal reduces long term carrying costs, including taxes and maintenance
- Exposes the property to a large number of pre-qualified prospects
- The seller knows exactly when the property will sell
- Eliminates numerous and unscheduled showings
- Buyers know they are competing fairly and on the same terms as all other buyers
- Buyers determine the purchase price
- Long negotiation periods eliminated
- Buyers receive comprehensive information on the property via a due diligence packet
All Auctions are not the same
The major categories of real estate auction are:
- The property is sold to the highest bidder, regardless of price.
- Since a sale is guaranteed, buyer excitement and participation are heightened.
- Generates maximum response from the marketplace.
- Many sellers, including financial institutions and government agencies, have begun to use the method more frequently.
Minimum Bid Auction
- The auctioneer will accept bids at or above a published minimum
price which is stated in the property brochure and advertisements and is
announced at the auction.
- The seller bears reduced risk because the sales price must be above a minimum acceptable level.
- Buyers know they will be able to buy at or above the minimum.
- Interest in the auction may be limited only to those buyers willing
to pay the minimum bid price which therefore must be low enough to act
as an inducement rather than a hindrance.
Reserve Auction (Auction subject to confirmation)
- The high bid is reduced, in effect, to an offer, not a sale.
- The seller reserves the right to accept or reject the highest bid
within a specified time – anywhere from immediately following the
auction up to 72 hours after the auction.
- A minimum bid is not published.
- Seller predetermines the price and is not obligated to confirm a sale other than an entirely acceptable price.
- A prospective buyer may not invest the time and expense of due
diligence when there is no certainty of buying the property even if
he/she is the highest bidder.
Commonly Asked Questions
Must I accept the high bid?
Not necessarily. The
auction can be structured in such a way that gives the seller the right
to accept, counter or reject any bid without having to disclose the
minimum acceptable price prior to the auction. The auctioneer can help
you to carefully select the type of auction that best suits your needs.
What impacts an auction’s success?
- Seller has realistic expectations, including a fair sale price, terms and timing.
- Desirability of the property, including location, condition, value of surrounding properties
- The auction method (absolute, minimum or reserve) suits the property and the seller’s needs.
- An aggressive marketing/advertising campaign targeted to prospective purchasers
- A realtor-auctioneer or recognized real estate auction company to
ensure the auction is conducted in a professional manner and followed-up
- Due diligence provided to prospective buyers ahead of time
- Property prepared for sale (best physical condition, title insurance, clean-up, financing, etc.)
©1998-2009 Rocco’s Auction & Appraisal Service
Rocco’s Auction & Appraisal Service
8990 Fry Road.
McKean, PA 16426