Real Estate Auction

The system of real estate auction is prevalent for hundreds of years even before the entry of additional intermediates like a real estate agent or a multiple listing service were introduced in the property market. The auction is still the fastest and preferred way to bring buyers and sellers together and complete the real estate sale. The bidders are in the same place and the buyers know upfront who they are bidding against and what exactly the last offer was. On placing the winning bid, the auctioneer immediately announces “sold” and the sale is signed off and the closing is planned and agreed upon by the seller and buyer.

There are three common types of real estate auction. First one is called “Subject to Confirmation” where the seller concludes or decides the final bid. Second method is “Absolute Auction” where the property is sold to the highest bidder in the auction sale. Third method is called “Minimum Bid” where an opening bid at a minimum value is made. However, every Auction Company or Auctioneer has different rules for their auctions. The method of auction will be announced earlier. Usually the auctioneer has the authority on all auction matters. Further legal guidelines can be obtained from the National Auctioneers Association.

The buyer is usually asked to deposit a substantial amount of the sale after the real estate auction is over. The balance amount is to be paid within a period of 15 to 60 days depending on the auction company. The buyer is expected to have sufficient financing in hand during the auction so that he could bid comfortably. The auction is usually held at the property premises so that the buyer could actually inspect what he is bidding on. If due to explainable circumstances the auction is held elsewhere, the buyer still has all the opportunity to inspect the property before bidding. Most of the auctioneers charge for their services from the sellers. However, there are few that charge the buyers as well.

There are some distinctive advantages for Real estate auction over the traditional selling methods to sell the real estate property. Real estate auction is focused on the property alone and the property gets exclusively and extensively featured. Whereas through a regular advertisement the property is one among many and the property is heavily relied on multiple listing services. The results are often offered in a month or two and the buyers act on the seller’s schedule. In a regular sale attempt the property may remain stagnant in the market for months or even years and the seller has to wait for the buyer. When it comes to the pricing part in real estate auction, the property’s true market value is realized and there is absolutely no limit on the upward potential though. Property is sold for expected price in real estate auction method, where as through the traditional method, under evaluation is quite common.

Another major advantage is that all offers from the buyers are presented before and during the auction unlike a regular sale where multiple offers at the same time are quite uncommon.