Real Estate Auctions are unique, in experience, sound, and practice, but are more common than some people realize. Mainstream real estate auctions are rapidly growing around the country and eventually will become the preferred sales tool for real estate sales utilized by brokers/agents over the next few years.
Auctions impact how people do business in almost every industry and much of our daily lives are impacted by auctions. For example, the world’s finest art, classic cars, yachts, and memorabilia are sold at auction. The stock market is an auction that controls the value of stocks, livestock auctions have an impact on the cost of food products and energy prices are determined at the Chicago Mercantile, just another auction platform. The interest rate on money is even controlled by auctions. Over the past 20 years, eBay has brought auctions into every aspect of daily life and has sold billions of items by the auctions method.
Real Estate auctions have become mainstream and not just for distressed properties. So why not buy real estate at an auction? It is the fastest and best way to buy property!
Benefits To The Buyer:
- Properties are usually purchased at fair market value through competitive bidding;
- The Buyer knows the Seller is committed to sell;
- Buyers determine the purchase price;
- Auctions eliminate long negotiation periods;
- Auctions reduce time to purchase property;
- Purchasing and closing dates are known;
- Buyers know they are competing fairly and on the same terms as all other Buyers;
- Buyers receive comprehensive information on property via due diligence packet.
Love Auctions Are Built For Buyers
Love Auctions understands the hesitation that many people have when purchasing real estate at an auction. In certain areas in the country, real estate auctions are primarily for distressed properties, properties in foreclosure or properties in bankruptcy. In addition, with these types of distressed properties, there is typically a lack of property information available to Buyers and limited access or the ability to inspect the property whatsoever. This total lack of transparency makes it nearly impossible for potential Buyers to feel comfortable about purchasing real estate at an auction which also drives the sale price down.
However, in other parts of the country, real estate auctions are the preferred option to buy and sell residential and commercial properties. Why? Because the property information and access are readily available to potential Buyers and the properties being auctioned are not distressed, driving prices up to actual market value. Regular folks like you purchase real estate through the auction process and the trend is exploding all over the country. Love Auctions understands a Buyers concerns and hesitation when purchasing real estate at an auction and we go to great lengths to eliminate any concerns a Buyers may have to make the buying experience easy and rewarding.
Love Auctions believes in total transparency and provides a potential Buyers with an abundance of information about the property being auctioned to satisfy and all questions that a prospective Buyers may have. We leave “no stone unturned” and remove all the “unknowns” from of the auction process. Our policy is to provide a complete overview of the property unmatched by other auction companies and most traditional real estate firms. The information Love Auctions provides will eliminate any hesitation for a Buyers to participate in any of our auctions.
Buyers Get All The Property Facts Up Front NOTHING HIDDEN!
In addition to the customary information provided to prospective Buyers (professional photographs, tax records, utility information and floor plans, etc.) Love Auctions also provides prospective Buyers with much more critical information. Love Auctions will provide; a property inspection report, termite inspection report, radon test report, a plat map, title and lien search along with ample access to the property for in-depth inspections prior to the auction. All informational reports and services are provided by well know reputable third-party professionals at no cost to prospective Buyers. All the information along with a sample purchase contract is also posted on the Love Auction website weeks before the auction.
We Work With Your Real Estate Agent!
We are happy to work with your real estate agent. In fact, we think it is a good idea that a potential Buyers who are unfamiliar with bidding and purchasing real estate at an auction work with a Broker/Agent to help you through the process. We want every Buyer to feel comfortable and confident with the auction process. If you do not have an Agent, that is fine with us as well. Our Love Auction staff is always available to help any Buyer with questions, information, and advice.
Types Of Auctions
Selling Without A Reserve
Auctions “Without a Reserve” are also referred to as an “Absolute Auctions” and means the property will be sold regardless of the price. A Buyer can win the auction so long as the Buyer places the highest bid. The Seller must accept the highest bid regardless of the amount. The benefit of this strategy is the confidence it instills among Buyers as they know the property will be sold to the highest bidder on auction day. Buyers come prepared to make their highest and best bid and most often, Buyer turn out is much better than the turn out for an auction with a reserve. In addition, research shows that auctions without a reserve will bring a higher sale price for the property than an auction with a reserve auction.
Selling With A Reserve
Auctions with a Reserve means that the Seller has placed a minimum sale price the Seller is willing to accept for the property. The Reserve price is not revealed to the Buyers. Should a Buyer be the highest bidder at the auction, but the high-bid does not exceed the Sellers predetermined Reserve Price, the property will not be sold. Another form of a reserve auction is when the Seller places an “Opening or Starting Bid”, which is simply an auction with the reserve, however, the reserve is being disclosed upfront. This type of reserve auction lets potential Buyers know that the property will be sold, so long as the winning bid surpasses the Opening or Starting Bid.
Attend A Love Auction
Feel free to just gt your feet wet – don’t think you must go to your first auction ready to bid. You are welcome to attend any of our auctions to get a feel for how a Love Auction is conducted. Watch and listen, then move on to bidding only when you feel comfortable.
Prior to the start of the auction, our auction staff will spend some time addressing commonly asked questions and explaining how the auction is going to proceed. Once the bidding commences; our Auctioneer takes it slow to make sure that new bidders don’t get confused or frustrated with the bidding process. Always remember, that a bidder may ask questions to the Auctioneer or to a Love Auction staff member during the auction if you don’t understand something or the bid amount.
You can also participate in most of our auctions through the Internet subject to registering and posting the deposit. Should you choose to attend a live auction and plan to bid, we strongly suggest you arrive early with the required deposit, if you have not pre-registered. Again, ask questions if you are unsure about our policy.
What To Expect On Auction Day
At our auctions, the property is open for a final inspection one hour prior to the auction. The property information package will be available prior to the auction and is also available on the Love Auction website. To bid at an auction, we suggest that before the auction begins, you should make contact with the Auctioneer or a Love Auction staff member who is known as a “Ringman” to let them know that you are going to be a bidder. A Ringman is a Love Auction staff member who assists the Auctioneer with the auction and by taking bids from the bidders and then passes those bids on to the Auctioneer.
To bid, simply hold up your bid card or bid paddle so that it is visible to the Auctioneer or to the closest Ringman, or simply shout “yes.” The Auctioneer or Ringman will make eye contact with you and take your bid. The Auctioneer will immediately turn to another bidder and seek another bid. You can remove yourself from the process at any time by shaking your head “no” or saying “no” if the Auctioneer or Ringman turns your way.
Keep in mind that at the same time the Auctioneer and Ringmen are taking bids from the bidders attending the auction, Internet Buyers are bidding along with Buyers on the telephone are also bidding. A designated Ringman is assigned to take online and phone bids and relay their bids to the Auctioneer, who will announce the bids.
Should you be the highest bidder and the property are sold to you, you will be required to adhere to the terms and conditions of the auction as outlined in the Auction Agreement.
Buyers Premium & Other Buyers Closing Cost
In addition to the winning auction bid, the Buyers will also pay a “Buyer’s Premium”. The Buyer’s Premium varies from one auction to another and is clearly outlined in all the auction information packages and in the Buyers registration agreement as well as the purchase contract. A Buyer’s Premium can range from 5% up to 10% which is calculated based on the winning bid.
For example, if the winning bid is $100,000 and the Buyer’s Premium is 5%, the Buyer’s Premium will be $5,000 and the purchase price will be $105,000.
In addition, the purchase price does not calculate other closing costs normally associated with the purchase of real estate such as; legal fees, settlement fees, recordation and transfer fees, loan fees, insurance fees, utility deposits, etc. Closing fees also vary from county to county and from state to state. If you don’t have a real estate attorney, our staff can recommend an experienced real estate attorney who is familiar with real estate auction transactions.