About Real Estate Auctions
Real estate auctions are a means used to convey real property from seller to buyer. Potential buyers assemble, register and then participate in competitive bidding mediated by a licensed auctioneer.
With recent trends toward more innovative strategies regarding the disposition of real estate, there has been a re-emergence of the auction method and with it a wider acceptance of the process.
History
Throughout modern times, real and personal properties have been sold at auction. Used in ancient times as a means of settling estates or distributing the rewards of war and plunder, high bidders have always walked away with the spoils of an auction. The same can be said of today’s real estate bidders.
Real property auctions can be divided into two categories: commercial and residential. Within those categories are parameters and conditions that make each sale unique. Commercial properties can be sold off as proprietors retire or to settle estates and divide partnerships.
They also can be placed on the auction block as resolution to a foreclosure proceeding. Likewise, personal property auctions might represent forced sales or might simply be the method of sale an owner chooses.
Particularly with rare properties that present themselves as well beyond the means of ordinary bidders, auctions tend to bring about higher returns than conventional sales.
Selling By Auction
If you are considering selling your home or business by auction, there are steps you can take to ensure the best results. First and foremost you must have a realistic idea of what your property should fetch.
This can be done by collecting comparables of recently sold real estate in your area. Second, it is imperative that you employ an experienced, licensed auctioneer. A good real estate auctioneer will not only know how to effectively market your property, but might well have his own list of potential buyers in his company’s database.
Another important consideration is the reserve price. This figure, contractually agreed upon with the auctioneer, is the price below which you will not allow your property to be sold. Finally, you should be aware that an effective marketing program will cost you and not the auctioneer upfront money.
Buying At Auction
While savvy investors certainly can make a profit buying at auction, it is a misconception to believe that anyone can walk away from a real estate auction with a house for a dollar.
Appropriate research is the only tool that will yield real auction dividends. Know the value of the property, but also find out about any liens, unpaid taxes or fines. Find out as much as you can about the property owner and the reason for the sale.
Find out, if possible, what the reserve price is. If possible, view the property before the auction and be certain to find out the terms and conditions of the sale before attending.
Licensing
Auctioneers are licensed by the state and must adhere to guidelines set forth by statute. Whether you are buying or selling, it is a good idea to know with whom you are dealing. Look to attend auctions conducted by members of the National Auctioneers Association who are also certified through the Certified Auctioneers Institute.
Foreclosure
While an auction does not necessarily represent the last legal phase of a foreclosure proceeding, it might. If you are attending a foreclosure auction, you should be aware that the property owner is generally granted until the moment of the auction to produce money that will stave off the sale.
Also, under most state laws, the property owner retains ownership rights until after the auction. Therefore, it is possible that you will not have access to the property.
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