June 21, 2011
Myth 4 – The only reason people have an auction is because someone died or the seller is in financial distress.
There are a number of reasons why people choose to have a real estate auction. in fact some of the most common reasons have little to do with the sellers financial situation or the settlement of an estate.
Some of the most common benefits include:
1. Negotiations eliminated – Because price is determined with competitive bidding, there is no back and forth negotiating that can sometimes lead to a property not selling after considerable time has been invested.
2. Increased property exposure – Auctions require an aggressive approach to marketing because of a defined time of sale. A professional real estate auction company will be masters of marketing, to ensure a successful event.
3. Accelerated and time defined sale – Sellers love to know when their property will sell. With an auction, the date is set and the marketing begins. Marketing is usually done in 30 days with another 30 days to close. Knowing when your property will sell and close gives you an advantage when making important financial decisions.
4. No contingencies – The auction method of marketing allows to the seller to sell the property in it’s current condition, with full sellers disclosure. This allows for buyers to adjust their price in accordance with any repairs or work that needs to be done, while giving the seller the benefits of a guaranteed sale without contingency upon repairs or financing. All of the due diligence is done prior to auction day.
Time has become a valuable resource in our current society. This has created more demand for sale methods that appreciate the value of time. While real estate auctions have been historically linked to times of depression and used as a last resort, we are seeing more and more sellers choosing the benefits of a time defined auction sale as a FIRST CHOICE!
June 15, 2011
Myth 3 – I won’t get free and clear title on the property or the owner might take the property back from me after buying it.
This myth is based on the traditions of court house step type auctions, commonly referred to as sheriff’s auctions or tax lien sales. In this scenario the owner has a legal remedy to get their property back called a “redemption period.” Each State will have a different time frame for the redemption period.
Most auctions conducted by professional real estate auction companies are not these types of auctions, and redemption periods are not part of the terms and conditions.
In fact, most public real estate auctions conducted by a professional real estate auction company will include in the terms and conditions of the auction that the seller will guarantee title. Title work is performed in the same manner as a traditional transaction, and in most cases, the seller is responsible for the cost associated with the policy. (although this will vary from company to company)
It is always good to check the terms and conditions of the auction and make sure that you have a clear understanding of what the terms are, and how they will affect you as a buyer.
May 31, 2011
Myth 2 – The property is distressed, something must be wrong with it & I won’t find out until I buy the Property.
It is true that one of the primary reasons a Seller will choose the auction method of marketing, is the benefit of selling the property “as-is,” without contingency upon inspections.
However, this does not mean that the condition of the property is being hidden from the potential buyers. In fact, a reputable real estate auction company will use disclosure forms and encourage the seller to disclose all known defects or issues with the property.
In addition to encouraging full disclosure, a reputable real estate auction company will also give ample opportunity for inspections prior to the auction. This allows the potential buyer to make a determination of value based on their own inspections, or an inspection from a hired professional.
As real estate auctions have continued to grow in popularity, more and more sellers are taking advantage of the benefits of auction, and are considering the auction method of marketing as a first choice, not a last resort.
While it is common to see bank owned real estate auctions of distressed properties, you will also find that luxury homes, unique properties, bread and butter suburban homes, and a variety of different properties are sold at auction every day.
May 16, 2011
Myth 1 – If I buy a property at auction I will have to produce the total amount of cash on auction day.
Not all auction companies utilize the same terms and conditions, so make sure as a buyer you have a complete understanding of the terms and conditions of the auction.
Most public real estate auctions require a deposit on auction day, and allow 30 days for closing.
The deposit will usually be a flat amount, or a percentage of the total contract price.
Although the majority of the properties that are sold at auction are sold with no contingency, including financing, the 30 days to close allows for most buyers to utilize financing and purchase a property at auction without having to have the entire amount in cash.