A real estate auction is the sale of real estate property in “As-Is” condition for the fair market value, using a competitive bidding process.
“As-Is” is a legal term and concept used to disclaim liability for an item being sold. “As-Is” denotes that the seller is selling, and the buyer is buying, an item in whatever condition it presently exists, and that the buyer is accepting the item “with all faults,” whether or not immediately apparent.
The following information will provide a quick overview to help sellers learn more about the auction process.
Prior to selling real estate by auction, it is important to have sufficient knowledge of the property as well as knowledge of the current market. Assiter Auctioneers conducts due diligence by gathering facts and information about property and includes it in materials available to all bidders.
Once due diligence is complete, Assiter Auctioneers will develop a proposal to outline the details of the auction process and how the property is going to be marketed. The auction proposal includes a property analysis, marketing plan, proposed schedule of events, financial projections, fee structure, and closing information.
One of the most powerful success factors in using the auction method of marketing is an accelerated, polished, and comprehensive marketing plan. The marketing program is custom-designed to fit the needs of the seller and targets a prime audience suited for the property. Because the lead-time in a real estate auction is generally short, the marketing program must be comprehensive, intense, and targeted to perspective buyers. Marketing efforts typically begin six (6) weeks prior to the sale date.
The Property Information Package (PIP) is a comprehensive document that outlines important details of the property. Thorough research and a high standard of care are put into the development of the Property Information Package. By providing this information, bidders are given the confidence to participate in the auction possibly resulting in a higher sale price for the seller. This document is provided to all potential buyers.
The auction begins promptly at the appointed time with opening remarks summarizing the terms of sale, the methods of bidding, and any last minute changes or disclosures. These comments usually take only a few minutes, concluding with the auctioneer answering any final questions.
The Bidder Assistants are auction staff members who are positioned among the auction attendees to help all bidders communicate their offers to the Auctioneer. Bidders place a bid by raising their bidder card. It is a myth that bids can be made accidentally by scratching one’s nose or similar accidental movement. If a bid was not intended, the mistake is corrected by simply notifying a Bidder Assistant. Any tie bids or other issues regarding who has the high bid are always resolved by the Auctioneer, who has complete and final authority.
From the first bid, things move quickly with bidders offering their bids up to the price they are willing to pay. It is not necessary, nor customary, for the Auctioneer to slowly announce, “Going once, going twice, etc.” When it is determined that the final bid has been made, the Auctioneer will identify and congratulate the high bidder. In a “subject to confirmation” auction, the seller retains the right to accept or reject the high bid within a specified time after the auction. If the auction is for a single property such as a home, this concludes the auction and the purchaser simply executes the Real Estate Purchase Agreement and makes the required Earnest Money Deposit.
Closing on the property typically takes place within 30-60 days from the date of the auction. Closing is not contingent on financing, appraisals, or inspections.
If you have additional questions about auctions, please contact Assiter Auctioneers at 806.655.3900.