Things you should know when selling real estate at auction
If you are getting ready to sell your real estate, are thinking about the auction process, and don't know how it works....you are not alone. Most of the people we sell for have never sold anything (especially real estate) at auction and most never will again...So this is a mini course in the things you should know, and answers to the questions I am most often asked.
There are three ways to sell real estate at auction, all of which are good, but not right for everyone.
"By owner confirmation": This simply means that at the end of the bid calling, I will call you on the phone, tell you the number I have, and you can say yes or no. Before we sign the contract, we will discuss what you need from the property. If we both feel that this is "do-able" we will sign the contract and conduct the auction. The day of the auction, if we receive an offer that is less than the number we had discussed, you will still have the option of accepting that bid. The only draw back to this method is the number of potential buyers is not as great as with "ABSOLUTE".
"Absolute": This means exactly what it implies. That the property is absolutely going to sell to the highest bidder, regardless of price. This is not for the faint of heart...The up side of this is that everyone who ever had an interest in a property like this, everyone who ever thought at some time in their life they might have an interest in a property like this, some who have never thought they might have an interest in a property like this, but "what the heck!!" will be there. It will be a zoo. If you can take the pressure there is the possibility of getting more $ than anyone expected simply because of the number of people there. The down side is that you are going to have to sell it - no matter what!
"With Reserve" This means that you would establish a $ amount that the property would have to bring and you would sell it absolute above that amount. This amount will be public knowledge and included in all advertising. We have had great success with the reserve in the amount of the tax value or the amount of the mortgage. This removes the owner and the auction company from the establishment of the amount of the reserve, therefore there has not been a number stated of the amount anyone was expecting, but buyers would know what the least amount is that would buy the property.
The property is sold "as is-where is". This is a legal phrase that simply means that when the gavel falls and the contract is signed, there are no inspections, no "seeing if I can get financing for this amount", no seeing if I can get it re-zoned, no changing their mind..no nothing....it's sold. Auctions by Marshall, Inc. holds an open house a week prior to the auction for the prospective buyers to look at the property and we make ourselves available to prospective buyers for any and all inspections that they would like to do. They come to the auction armed with their knowledge that they have done and are ready to buy the property. Title to the property conveys just as any other private treaty purchase. The buyer chooses their own attorney and pays all closing costs with the exception of stamps and deed prep, which is paid by the seller. The buyer's attorney will search the title, prorate taxes and issue title insurance on the property at the buyer's cost.
The terms for most of our auctions are a down payment in a set amount by cash or certified funds. The down payment is non-refundable for any reason other than the seller's inability to convey title to the property. Due to this, people don't walk away from a down payment of $10,000 to $50,000. Closing must take place within 30 days.
The seller pays for the advertising at the signing of the listing contract. This is the seller's only expense. Auctions by Marshall is paid by the buyer in the form of a 10% buyer's premium. This buyer's premium is added to the final bid price and becomes part of the purchase contract, and therefore can be included in the buyer's mortgage. The amount of the advertising varies from property to property; however this amount is established prior to the signing of the listing contract.
At the conclusion of the bid calling, if the amount is acceptable, the contract is signed and the down payment is collected. We will handle all the arrangements with the mortgage company, and we will let the appraiser into the the property.
The only thing remaining for you is to come to the closing and pick up your money.
Then we celebrate your excellent sale...and the buyer's excellent new real estate!!