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 23, 2011
I am looking forward to attending and presenting a couple of seminars related to auction technology at The Alabama Auctioneers Association annual convention coming up June 5th through the 7th in Orange Beach Alabama.
In addition to having the opportunity to catch up with friends as well as make a few new friends, I will also have the opportunity to spend time in some very beautiful country.
It will not be my first trip to Alabama. When I was in my twenties and at the end of my service in the Army, I was looking for a decent used car to drive from Hinesville Georgia, where I was stationed, back home to Las Vegas Nevada.
A friend of mine had a brother in law who owned a used car lot in a small town in Alabama. I don’t remember the name of the town, but I remember the gorgeous country we drove through to pick it up.
After hours of driving and $700 I was the proud owner of a well used Dodge Dart. The car served me well for my journey home, as long as I fed it a quart of oil every time it needed gas, it was fine.
I have some fond memories of that drive home, and hope to make a few more on this trip to the great state of Alabama.
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.