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FAQ'S For Selling At Auction
What factors determine the success of an auction?
First, there is the desirability of the property being sold. This includes location,
condition and surrounding properties. Second,
there must be an aggressive marketing and advertising plan geared to prospective purchasers.
Furthermore, there needs to be realistic expectation on the part of the seller. Completing all
necessary diligence on the property beforehand ensures that buyers are knowledgeable. The only issue that remains is price.
What are the methods of
auctions?
There are various forms of auctions:
Absolute Auction - The property is sold to the highest bidder regardless of the price. The main advantage of an absolute auction is it generates maximum response from the market place. Since a sale is guaranteed regardless of the price, buyer excitement and participation are heightened. Because this type of auction generates an ideal response, many estate properties, financial
institutions and government agencies have begun to use this method in greater frequency.
Minimum Bid Auction - The auctioneer will accepts
bids at or above a specified, published minimum price. The minimum
price is clearly stated in brochures and advertisements, in addition to
being announced at the actual auction. In this type of auction, the
risk is reduced for the seller as the the sale price must be above the minimum
acceptable bid. Due to this type of auction, buyers know that they
will be able to buy at or above the minimum price. It is essential
for the seller to set the minimum bid low enough to act as an inducement
to the buyer rather than a hindrance.
Non-absolute or Reserve Auction - The owner predetermines the price at which the property will be sold.
A minimum bid may or may not be posted, and 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's conclusion.
Obviously, the advantage is that the seller is not obliged to accept a price other than one that is entirely acceptable. The main drawback of such an auction is that many prospective buyers do not want to invest the time and expense of investigating a property when they have no certainty they will get the property even if they are the high bidder. The high bid is reduced, in effect, to an offer, not a sale.
How long does it take to market the property, have the auction, and close the transaction?
The time frame varies depending upon the type of property auctioned. Generally, the process takes 45 to 90 days from the time a contract is executed to closing. The auction itself may take anywhere from twenty minutes on a single property to all day on a multi-property auction.
What are the terms for selling at auction and who sets the terms?
The seller sets the terms with the
advice of Scott Heise.
Typical terms are that the high bidder deposits earnest money (either a percentage of the purchase price or a stated set amount) and enters into a purchase contract immediately following the auction. The down payment is non-refundable and is forfeited if the
buyer fails to close. After selling expenses are deducted, the balance goes to the seller. The balance of the purchase price is due at closing which is generally 30 days from the auction date.
Properties generally sell “as is, where is” with no warranties expressed or implied. Since the only issue left is price, due diligence is done in advance of the auction such as preparation of information packages and information reports. When selling “as is” it does not include fraud, misrepresentation, or deceit.
 How much does an auction cost?
Scott Heise will charge
a commission to the buyer in the form of a buyer’s premium. A buyer’s premium is a percentage that is added to the bid price to equal the total contract price. It is usually expressed in the form of percentage added to the bid price. The typical buyer’s premium in real estate is 10% to12%.
There is also a one-time marketing fee. This varies
by property.
What expenses will I have to pay to get my property closed?
Deed preparation, transfer tax (stamps) and prorated property
taxes are expenses required for closing. All other closing costs are charged to the purchaser, along with any survey fees or other special assessments.
When is the best time to sell my property at auction?
Real Estate sells well throughout the year and there really is no time that is better than another. If a potential buyer is interested in purchasing a property,
then the buyer will make arrangements to attend the auction.
Are there any other risks I should be aware of concerning the auction method of selling?
The biggest danger in selling real estate in any manner is the failure to disclose all pertinent information. That is why we provide terms and conditions on auction day to all prospective buyers that covers all pertinent information relating to the property being sold. This is your best protection that the sale will close in a timely fashion.
We also disclose all agency disclosure laws, and have each successful purchaser execute
any required disclosure forms.
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513 - 368 - 4928 
