An auction is a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder. There are several variations on the basic auction form, including time limits, minimum or maximum limits on bid prices, and special rules for determining the winning bidder(s) and sale price(s). Participants in an auction may or may not know the identities or actions of other participants. Depending on the auction, bidders may participate in person or remotely through a variety of means, including telephone and the internet. The seller usually pays a commission to the auctioneer or auction company based on a percentage of the final sale price.
When auctioning a foreclosed property the noteholder may set the starting price as the remaining balance on the mortgage loan. In a weak market the foreclosing party may set the starting price at a lower amount if it believes the real estate securing the loan is worth less than the remaining principal of the loan.
In the case where the remaining mortgage balance is higher than the actual home value the foreclosing party is unlikely to attract auction bids at this price level. A house that went through a foreclosure auction and failed to attract any acceptable bids may remain the property of the owner of the mortgage. That inventory is called REO (real estate owned). In these situations the owner/servicer tries to sell it through standard real estate channels.
Not all properties are suitable for an auction environment. You will need a skilled auctioneer who possesses the market knowledge to analyze the property to determine the overall prospects of desirability. Why waste your time taking a property to auction when it would do best in a traditional listing environment.
Attract as many buyers as possible to the property on sale day. A massive marketing campaign involving email, advertising, signage and internet publications is a must with any auctioneer you use.
Use an experienced auctioneer. The auctioneer must have the skill to know what to say, and when to say it in order to encourage the right level of buyer activity on the day of sale. This lack of experience can dampen the free flow of bids resulting in a lack of competition. Make sure the auctioneer is fully licensed and have been trained under some of the industry’s best.
· Your property is SOLD on a specific date. No more guessing and hoping for a buyer to come along, you determine the sale date that works for you, when the gavel drops – it’s sold!
· No drawn out negotiations or time wasting “tire kickers.”
· No contract contingencies or due diligence period. When a sale concludes a contract is signed, a non-refundable deposit is collected and the property closes in 20-30 days.
· Eliminate the carrying costs of a property. No more house payments, taxes, utilities or maintenance costs during an extended marketing period.
· Obtain the Highest and Best Price for your property from the start! A properly prepped and managed open bid auction results in the only true market environment, thereby garnering you the best price!
How It Works
The first step is to determine if the auction method is right for your property and if your property is right for the auction method. Meet with the auctioneer face to face on site of the property. By meeting with you one on one, the auctioneer is able to answer your questions, examine the property and work with you on a plan to accomplish your goals.
Once you’ve decided to move forward with the auction, the next steps involve more than just setting a sale date. From this point forward the auctioneer will be working at capturing and holding onto a prequalified buyer. Make sure that your auctioneer has all buyers register ahead of time, and provide either a letter of credit or proof of funds. This allows you to really know that the buyer has the capability to close on the purchase before the first bid is spoken. For most auctions the auctioneer will have a lender ready to prequalify the buyers with special financing incentives.
After the auction, the winning bidder must provide certified funds for a substantial non-refundable deposit and sign a binding contract for sale to close within 30 days. Many times the sale can proceed to closing within 20 days but typical funding will take about 30 days from contract date.
It’s a simple process and is completely transparent. The highest bidder wins! Have fun with it!
Benchmark Realty, 7107 Crossroads Blvd., Suite 102, Brentwood, TN 615-371-1544
Diane Osowiecki, license #290309 cell - 615-406-2184 email email@example.com
Mandy Buchholz, license #309437 cell - 615-477-6959 email mandybuchholztn@gmail
Bob Osowiecki, license #325031 cell - 615-878-3902 email firstname.lastname@example.org