October 3, 2011
Myth 9 – All auction companies are the same, and all auctions are run the same.
Make sure you read the terms and conditions for each auction and that you call the auction company to ensure that you understand their use of specific terminology.
There are many variables that should not be assumed to be the same for every company. One example is that some companies utilize a percentage of the high bid while others utilize a flat amount for the deposit on auction day.
Other considerations are licensure and continuing education within the real estate and auction industry. It is important to work with auctioneers who are committed to their industry. Several questions to ask a prospective auctioneer or auction company are:
Are you actively involved in the National Auctioneers Association? Do you have additional certifications of industry related education such as Certified Auctioneers Institute, Accredited Auctioneer of Real Estate, Auction Technology Specialist, etc?
It is my opinion that we should never stop learning, and never stop striving to be the best that we can be. This is the only way that we can ensure that we are always on the cutting edge, and suited to help our clients in their time of need.
There are a lot of great auctioneers and auction companies out there to choose from. Understanding the differences between them can help you find a provider who is a good fit for you and your specific needs.
July 4, 2011
Myth 6 – An Auctioneer needs to be a licensed real estate agent to sell real estate at auction.
This is one myth that is quite an eye opener. In the State of Kansas, a real estate license is required to conduct a real estate auction. In the State of Missouri, all you need is $52 and a pulse to be a licensed auctioneer and be able to offer real estate at auction.
Other State laws vary, and in fact some States have very strict laws and guidelines, while others do not. It is important to know this if you are interviewing a real estate auction company.
Following are a few questions that you should ask in regards to licensing and professional standards when speaking with a real estate auction company.
1. Are you a licensed broker or agent? If you are an agent, who holds your license?
2. Are you a member of the local real estate board?
3. Are you a member of the local MLS?
4. Do you post your auctions on the MLS?
5. Are you required to attend continuing education courses in real estate to keep your license active?
A professional real estate auctioneer will be able to answer all of these questions properly.
It is important to know who you are doing business with.
June 22, 2011
Myth 5 – The auction company places people in the crowd to bid for the seller.
This is one of my biggest pet peeves. It is called shill bidding and it is WRONG!
There is no need for this type of activity, and a reputable auction company will not plant bidders in the audience.
It is important to read the terms and conditions of the real estate auction to understand what type of bidding is allowed. If a property is being sold ‘subject to owner confirmation,’ and it is disclosed that the auction company can bid on behalf of the seller up to the reserve amount, then this is perfectly legal and acceptable. The key is full disclosure. In this case bidders know who they are bidding against and can make an informed decision as to whether or not they want to increase their own bid.
If the property is being sold without reserve, or absolute, there is no allowance for the auction company to bid on behalf of the seller. This is the purest form of an auction.
Sometimes there is phone bidding, online bidding or absentee bidding at a real estate auction. These bids will be handled by a staff member and it will be known that these are qualified buyers who have filled out the necessary paperwork and made the necessary deposit prior to auction day.
If you do business with a professional real estate auction company, there will be no shill bidding. It is important to examine a company and understand their ethical practices.
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.