Why Auction?
Auctions Bring Quick Sales.
Auction sales can often be closed instantly or within an acceptable time frame, depending on the sellers' requirements and flexibility. When the sale is over we will provide to you a signed purchase contract with no contingencies, other than marketable title.
Auctions Establish and Build Value.
Auctions have the potential to generate higher prices than conventional sales in both individual and bulk sale settings. The auction method of marketing creates a form of competition that cannot be duplicated by traditional methods. Each bid reinforces the market value of the property. This affirmation of value encourages other participants to continue bidding.
Auctions Motivate Buyers To Action.
An auction is a catalyst for motivating hesitant buyers into action. The auction brings all interested parties into one place at the same time for a single purpose - to determine who will pay the most for the property. All interested parties are "forced" to make a decision and bid competitively.
Auctions Provide Instant Liquidity.
They transform surplus holdings into cash or earnings assets.
Auctions Expand Market Reach.
This is one of the strongest advantages of our auction method - the promotion of your property. By using signs, print media, electronic media, the Internet and a direct mail campaign we can perform a media blitz that will reach a wider audience of prospective buyers. Motivated by the already determined sale date, we can put more people across your front door in two weeks time than you might otherwise see in two years! In addition, the marketing programs that support an auction can expose properties to a regional, national and international audience.
Auctions Get Attention.
Buyers perceive opportunity and are willing to investigate the property being sold at auction.
Why is the property being sold at auction instead of using the traditional listing method?
The sellers' of these properties have chosen the Accelerated Marketing Method in order to sell their properties in an expedient and timely manner. Part of their reasoning includes the holding costs to maintain the properties (e.g., real estate taxes, insurance, association dues, the cost of money, etc.). With these sales, both the buyers and the sellers should be pleased. The buyer(s) should be able to obtain these properties at a very reasonable price. The sellers will be able to obtain an expedited transaction. With a traditional listing, there is no apparent "sense of urgency"- no reason to act quickly. Auction advertising stands out, and signals a buying opportunity.
Doesn't the auction method usually suggest a distressed sale?
Absolutely not! In recent years the popularity of competitive bidding has exploded to an estimated $50 billion in annual sales. Fortune 500 companies including McDonald's, Kmart, Wal-Mart, Chevron and Exxon utilize competitive bidding because they know it is the best way to achieve the highest price in the shortest time. Estimates show that over 30% of all real estate in the U.S. will be sold using accelerated marketing by the turn of the century. Government agencies such as the RTC, FDIC, U.S. Customs, U.S. Marshals Service and the S.B.A. all use the accelerated marketing method.
What are the three types of auctions?
1. Absolute Auction:
Property to be advertised and sold to the highest bidder regardless of price. This approach allows the Auction Method of Marketing to work at its maximum potential and creates the utmost motivation for prospective buyers to become interested in the property and ultimately attend and participate in the auction.
2. Minimum Bid Auction:
Property to be advertised and sold to the highest bidder above a pre-determined and advertised minimum bid.
3. Auction Subject To Confirmation:
All auctions are with reserve unless otherwise advertised. Property to be offered at auction with the final bid subject to the seller's approval. The seller agrees to sell above a pre-determined price, but that figure is confidential between the seller and the auctioneer. However, sellers spend a great deal of time and upfront money on an Accelerated Marketing Program. They are definitely motivated to sell!
What Is A Sealed Bid Auction?
Most of the auction procedures and "rules" are used in a Sealed Bid Auction. The major difference is that all bidders submit their bids in sealed envelopes in accordance with the auction terms of the Sealed Bid Event. The bids are then opened and the successful bidder is notified. Frequently the top bidders are invited to a private, live auction, with the highest "sealed bid" amount being the opening live bid.
What is "high bidder's choice"?
Properties that are similar (such as office condominiums or residential lots) may be sold using the high bidder's choice method. The high bidder or winning bidder may select from all of the lots in the group, and choose more than one. Of course, if the bidder chooses three lots, the bid is multiplied by three. In order to have the opportunity to choose your lot, you must compete and become the winner.
What is a buyer's premium?
A buyer's premium is an amount of money, usually a percentage, that is added to the bid price to determine the total purchase price. For Example: Assume there is a 10% buyer's premium. If you bid $750,000 on a property, then the total purchase price would be $825,000 ($750,000 plus $75,000 buyer's premium).
How is the property transferred to me?
Generally, a property is conveyed by Warranty Deed, free and clear of liens and encumbrances (except for foreclosures where the buyer would be responsible for all outstanding real estate taxes, municipal liens, etc.). See the Terms and Conditions of the particular auction for specifics. Closing costs are primarily governed by the state in which the property is located.
What does it mean to buy the properties in "as is" condition?
Buyers purchase the properties with no guarantees in regard to the condition of the properties. Buyers shall rely entirely on their own information, judgment, and their own inspection of the properties.
What are the Terms and Conditions of the sale?
The Terms and Conditions govern the sale. They include information such as the required deposit amount, when the sale of the property will close, and other key facts. You should familiarize yourself with these prior to the auction. Summaries of the Terms and Conditions are available within the Property Information Package. You should note that at an auction sale, any announcements made by the auctioneer on the day of sale take precedence over previously published or verbally conveyed terms and conditions.
Is there additional information on auction properties?
Property Information Packages are available through our web site for each individual auction, and help the interested bidders begin their due diligence process. Often they include terms, deeds, general information, tax maps, assessor's cards, Purchase & Sale Agreements, etc.
How do I preview auction properties and perform a property inspection?
Most of our improved properties are usually open for inspection the weekend prior to the auction date and one hour prior to the scheduled auction time. Please feel free to bring your contractor or home inspector to the preview.
Can I use the services of a real estate broker to assist me?
Broker Registration is welcomed and encouraged at most of our auctions. Forms are available from the Auction Company with specific terms for that property.
Do I need to pre-qualify?
No. We normally do not require any pre-qualification to bid; however, if you intend to obtain financing, your bank will require you to qualify for their loan. The deposit you make on auction day is usually not contingent upon financing.
What do I need to do to bid at a real estate auction?
Carefully review the Property Information Package and complete any further due diligence that is important to you. If you have any concerns about the property, seek out professional advice. Bring the required deposit to the auction and be prepared to sign the Purchase & Sale Agreement if you are successful.
1. Register at the registration table for a bidding number. A valid driver's license or other acceptable form of identification is required.
2. Ask any last minute questions prior to the start of the auction.
3. If you have any questions, see one of the Auction Team members and ask them for assistance.
If I can't be present at the auction can someone bid for me? Can I bid by telephone?
Yes. You may appoint a representative (by signing a Power of Attorney) to bid on your behalf. Often times the auction company offers live remote bidding by telephone through an auction representative or has live Internet bidding capabilities.
Can I come to the auction just to watch?
Certainly, we encourage anyone to attend and watch the bidding. You will be entertained and amazed at the process. On occasion our sellers do request that attendance be limited to registered bidders only.
What happens if the high bidder fails to close?
The auction company immediately notifies the backup bidder in order to secure a new Purchase & Sale Agreement. If not, the property is made available to other registered bidders and the open market.
Can I make an offer before the auction?
Absolutely. We will write the offer and present it to the owner for consideration. Of course, the Terms and Conditions of the auction should be followed. We recommend that you make your best offer at this time.
What about the title? Will I buy a property with unpaid back taxes or liens?
Most auction properties are sold with good, insurable title and no liens, judgments, mortgages, or back taxes. If the title cannot be cleared, the deposit is refunded to the buyer; however, buyers must refer to the terms for each auction before bidding. Read the copy of the Purchase & Sale Agreement for the actual terms of each auction.
Will the Seller be bidding up the price?
No. Property owners are prohibited from bidding.
Our method will stop holding costs and negative cash flows that drain investors. If you're considering holding your property with hopes of a higher price, consider the following:
1. What is the PRESENT value of the cash you could have TODAY . . . compared to receiving an unknown amount at an uncertain time in the future?
2. Mortgage payments, taxes, insurance and maintenance costs continually build.
3 Economic "uncertainties" could cause a decline in value.
Can I set a minimum on my property?
Yes. We will analyze your property and consult with you on a minimum or reserve price prior to the sale. This price is not advertised or disclosed to the bidders.
Does it really matter which company I employ?
YES! It is important to look to an Auction Company with the depth of experience with the type of property you are looking to sell. Paul McInnis, LLC has the experience in all property types and market conditions.