Real Estate at Auction
- Real Estate SOLD at Auction
- Every year, billions of dollars of real estate are sold at auction. Everything from single family dwellings, building lots, agriculture, farms, commercial, industrial, and recreational properties. Using the auction method of marketing and competitive bidding, real estate at auction can produce the best possible result. Most auctions today are not a result of distress, but rather a better, cost effective and timely way to Sell their property now and not wait months or years by other means.
- How Do I Prepare to Bid on a Property?
- The main difference between buying real estate at an auction versus buying real estate conventionally is that at auction you are responsible for the property evaluations, any inspections you want done and being prepared financially to bid on and settlement for the property. Once a property is found that you consider bidding on, call or make contact with a lending institution. They can walk you through what is involved with financing that property. Doing this prior to the auction is essential for making auction day a success and being sure you can bid with confidence. By bidding on the property at auction, you can rest assured you are getting the property for a fair value, playing by the same set of rules, not losing the property because of contingencies, or seller concessions. This is the fairest way to buy real estate.
- What Do I Need to Do Prior to the Auction?
- When you see a property advertised either online or otherwise, note a date for Open Houses where you can walk through and inspect the property. In the advertising, you will also see the Terms of the auction. This is the amount of money you will need auction day (usually 10% of the purchase price) and the time you will have to do financing if needed to settle. This can be anywhere from 30 to 60 days depending on the property.
- What Happens on Auction Day?
- Properties are normally open 1 hour prior to the auction. You will need to register for the auction and will need to have a driver’s license so you can get a bidder’s number. You will need a personal check or cashier’s check to pay the down payment for the real estate if you are the winning bidder. You should plan on being on time because a real estate auction can be over in 30 minutes.
- Bidding at Auction
- To bid at an auction you will simply need to get the auctioneer’s attention. He will be asking for bids (i.e. saying the numbers) and by holding up your hand, or bidder card, or shouting yes, he will look at you and acknowledge your bid. Conversely, if you want to take yourself out of the bidding you can simply shake your head no when the auctioneer looks at you. It’s just that easy. In some cases, there may be a bid assistant or ring man who works with the auction company that can help you with this. The auctioneer wants to provide you every opportunity to place your bids and will not allow you to bid against yourself.
- What is the Difference Between Absolute and Reserve Auction?
- A reserve auction is an auction where the seller has the right to accept or reject the final bid. All auctions sell subject to reserve unless otherwise stated. In the event the final bid is not accepted the auctioneer may work with the top bidder to reach a mutually agreed upon price to get the real estate sold.
- An absolute auction is an auction where the property sells to the highest bidder regardless of the price.
- What Happens After the Property Sells?
- Once the final bid is called and the auctioneer says sold, the winning bidder is required to sign the Conditions of Sale. The Condition of Sale is, in essence, the contract between the buyer and seller, which is normally read prior to the auctioneer calling the bids and is available to be read prior to the auction and may be available to be read online prior to the auction. The buyer will sign the Conditions of Sale and then write a check for the 10% deposit. When you get your financing done, a settlement day will be set up where the final paperwork will be signed, the remainder of money is exchanged, and you will receive your keys.
- Warranties, Title Insurance, Taxes, etc.
In most cases when you buy real estate at auction, you will get a Special Warranty Deed, free and clear of liens and encumbrances. Title insurance assures
you get a clean clear and marketable title. Purchasing Title Insurance is the responsibility of the buyer. Taxes, like real estate, school, and municipality,
will be paid at settlement and will be prorated to the day of settlement.
Inspections can be done prior to the auction. Inspections are for your information only and can be a tool to help you bid, buy they cannot be used to put a contingency on the sale.
Conditions of properties vary, and properties are sold as-is, so it is important to inspect the property prior to the sale.