Auction Process

BENEFITS TO THE SELLER:

• Buyers come prepared to buy
• Quick disposal reduces long-term carrying costs, including taxes & maintenance
• Assurance that property will be sold at true market value
• Exposes the property to a large number of pre-qualified prospects
• Accelerates the sale
• Creates competition among buyers - auction price can exceed the price of a negotiated sale
• Requires potential buyers to pre-qualify for financing
• The seller knows exactly when the property will sell
• Eliminates numerous and unscheduled showings
• Takes the seller out of the negotiation process
• Ensures an aggressive marketing program that increases interest and visibility

BENEFITS TO THE BUYER:

• Smart investments are made as properties are usually purchased at fair market value through competitive bidding
• The buyer knows the seller is committed to sell
• In multi-property auctions the buyer sees many offerings in the same place at the same time
• Buyers determine the purchase price
• Auctions eliminate long negotiation periods
• Auctions reduce time to purchase property
• Purchasing and closing dates are known
• Buyers know they are competing fairly and on the same terms as all other buyers
• Buyers receive comprehensive information on property via due diligence packet
• Financing may be available to buyers.

Buyer Preparation:

• Attend at least one open house to determine the condition of the property.
• Examine the property information provided by the auctioneer, including the sales contract.
• Determine what is included in the sale.
• Understand exactly what you are bidding on and the terms of sale associated with the auction  process.
• Seek the advice of an attorney, auctioneer, real estate broker and/or appraiser.

Types of Auctions

Absolute Sale
The absolute sale is the purest, and in many cases, the most successful form of auction in terms of getting the highest price for property. With this type of sale, the property is sold regardless of price. This sends a strong message to the bidding public that the property will be sold for sure on auction day. Buyers can justify their time and effort knowing the property will be sold on auction day at their price. If the buyer feels he or she can buy the property at their price, then the buyer is more likely to bid. The buyer also realizes that a bid must be submitted because the property will be sold on a certain day and that there is " no tomorrow" to negotiate with the seller. Through aggressive bidding, true market prices can be obtained at auction. While the seller has a risk of being forced to sell the property at a price that is too low, the advantages of this type of auction far outweigh the risks.

Reserve Sale
With this type of auction there is no published amount at which the seller agrees to sell the property. The high bid is subject to the seller's confirmation typically at the auction. This method protects the seller from selling the property for too low a price. The motivation for a buyer, once again, is that they may be able to obtain the property at his or her own price, not the seller's price. A seller may offer a cash payment or inducement to the highest bidder if that bid is rejected, which is called a buy back. This indicates to the bidders that their efforts will be rewarded if they are the highest bidder and a sale does not occur.

Minimum Bid Sale
This is a hybrid of the absolute auction and reserve auction. With the minimum bid offering, the seller determines a minimum price level above which he is committed to accept. This type of sale is effective only if the minimum bid is low enough to stimulate buyer interest. If the minimum bid is too high or near market value, potential buyers will often be discouraged from inquiring, inspecting, and therefore buying the property. Minimum bid levels can be difficult to determine in soft, slow markets where real value cannot be readily determined. This method of sale can both attract buyers and protect sellers from offers that are too low.

The form of the auction depends on a number of factors, including market conditions such as location, declining or appreciating market, physical condition of the property as well as financial constraints such as mortgages and liens. Our recommendation of the form of auction is based upon years of experience in this marketplace and our commitment to bringing you the top market value for your property.

Buyers Premium:

The buyers’ premium is an additional charge added to the top bid price. Typically, the buyers’ premium is a five percent (5%) premium added to the last bid price. The buyers’ premium is used to defray the cost of the auction for the benefit of the seller. The buyers’ premium may be used to pay the advertising expense of the auction, buyer broker participation as well as the auction company's commission.

Auctions are not last-ditch efforts. The most savvy of sellers actually prefer auction marketing and frequently select the auction method of marketing as the best method of sale. Using the "time value of money", an auction sale price today may be worth more than waiting for the right buyer in a negotiated sale in six months or a year especially after deducting carrying costs and interest.