For your convenience, we’ve answered some of the most frequently asked questions about J. Durham & Associates, auctions and real estate marketing.
If you have a question, please Contact Us for information on how to submit your question or reach us directly for assistance.
What is a real estate auction?
A Real Estate Auction is a method of buying and selling real estate. It is an intense and accelerated real estate marketing process that involves the public sale of property through open, competitive bidding.
Under what terms does a Property sell at Auction and who sets the terms?
The seller sets the terms with the advice of the real estate auction company.
Usual terms are that the high bidder deposit earnest money (either a percentage of the purchase price or a stated set amount) and enter into a purchase contract immediately following the auction with the balance of the purchase price due usually within 30 days of the closing. The seller provides a clear title.
Properties generally sell ~as is~ with no warranties expressed or implied. Since the only issue left is price, due diligence is done in advance of the sale such as preparation of information packages and inspection reports.
What does the term ‘reserve’ mean?
In a reserve auction, the auctioneer will submit the highest bidder to the seller. The seller then has the right to accept or reject the bid.
What does the term ‘absolute’ mean?
Absolute means the property will be sold to the highest bidder. There are no minimums or reserves in an ‘Absolute’ auction.
How much does an Auction Cost?
Like real estate brokers, auctioneer’s charge a commission as a percentage of the sales price that is pre-determined. Sellers can choose between a traditional commission charge or the more modern method of a buyer’s premium, in which case the buyer pays the commission. In addition, the out-of-pocket expenses relating to marketing and promotion as well as to conduct the auction are negotiated between the seller and the auctioneer.
Are auction sales contingent on inspection?
All of our sales are on an “as-is” basis. There are no warranties as to the condition and/or the fitness of the property for a particular use.
We encourage our buyers to do their due diligence prior to sale day for their own protection.
If I win the auction, what happens to my deposit money?
Your deposit money will be deposited in an escrow account after the bid is accepted by the seller. In the event the bid is rejected, your check will not be deposited and will be returned to you.
What happens if for some reason the buyer cannot settle on the property?
A well-conducted real estate auction by its very nature minimizes such failures. Failure to close can happen, but it isn’t frequent. If the rare failure to close occurs, the auction seller can turn to the next highest bidders, who demonstrated their willingness to pay nearly as much as the buyer who failed to close.
If the buyer fails to settle on the property, he/she will be considered in default of the sales contract. In this instance, the buyer will lose all or part of their deposit and potentially be responsible for the cost of reselling the property.
If the Property doesn’t sell at Auction is it possible to still market it?
Yes. The real estate auction marketing method has exposed the property to a large segment of the buying public. Many times a buyer who wants the property but is uncomfortable with the auction process will make an offer after the auction date. In other instances offers to buy the property prior to the auction date are made and accepted. Auction pressure forces buyers to act.
Real Estate Auctions are often thought of as a “Fire Sale” for someone who cannot make their Mortgage payments. Is this true?
No, auctions today don’t result from individual’s repossessed properties, but rather are a result of the smart seller, who chooses the cost-effective, accelerated method of selling a property rather than laboring for months or years to sell it. This acerbated sale allows the seller to eliminate virtually all long term carrying costs. These cost savings to the seller are passed along directly to the purchaser in the form of reduced prices.
It is truly a win=win situation. Sellers can move on, and buyers can purchase properties at fair market value.
Are all auction companies the same?
No. In fact, there is a great difference between the experience and expertise of auction companies. The success of real estate auctions in the past few years has led to many real estate companies trying to sell property at auction.
Since you only get one chance to sell your property at auction you need to choose a company that has a successful track record.
How do i determine if my property is a good candidate for an auction sale?
Contact us and talk to one of our experienced auction professionals. They will make an appointment to come and meet with you, view your property and make an auction evaluation. You may reach us at 800-342-2666 or by email at [email protected].