Q. What Is A Real Estate
Auction?
A. Real Estate Auction is a method of buying and selling real estate which
accelerates the purchasing process through the medium of an auctioneer.Q. What Are the Benefits of a Real Estate Auction?
A.The Real Estate Auction is definitely a win-win proposition for everyone involved. The
seller disposes of properties quickly and efficiently, thereby saving long-term carrying
costs such as interest, real estate taxes and maintenance. For the buyer this can mean a
smart investment, since properties are usually purchased at fair market value through
competitive bidding.
Because the auction sale is conducted in an open forum, both motivated buyers and
motivated sellers have assurance of watching the property's true market value emerge as
the bidding process progresses. For buyer and seller, fair market value for the property
prevails.
Q. What is an Absolute Auction?
A. An auction where the property is sold to the highest qualified bidder
with no limiting conditions or amount. The seller may not bid personally or through an
agent. Also known as an auction without reserve. Typically, no-reserve or absolute
auctions receive higher final bids. This is partly due to the larger total number of
bidders the property attracts. For a buyer, a high number of bidders makes a property seem
more desirable.
Q. What is a Reserve Auction?
A. An auction in which the seller reserves the right to establish a reserve price, to
accept or decline any and all bids or to withdraw the property at any time prior to the
announcement of the completion of the sale by the auctioneer.
Q. What Terms Does A Property Sell At
Auction And Who Sets The Terms?
A. The seller sets the terms with the advice of the auction company. Some terms included
in the auction contract are as follows:
The winning bidder enters into a legally and binding purchase contract and is usually
required to deposit earnest money (either a percentage of the purchase price or a stated
set amount) immediately following the auction: The balance of the purchases price is
usually due within 30 to 60 days at the closing. The seller generally provides title
insurance. Properties generally sell "As Is" with no warranties expressed of
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.
Q. What Happens To The Earnest Money If A
Buyer Decides At A Later Date Not To Buy The Property?
A. Many of the same things happen in an auction situation as in any other real estate
transaction. The earnest money deposit is forfeited if the higher bidder is unable to
consummate the sale regardless of the reason. If the seller fails to close because of
defective title, etc. The buyer's deposited will be refunded immediately.
Q. What is A Buyer's Premium?
A. A buyer's premium is an additional charge to the purchaser of the property. It is
usually expressed in the form of a percentage the high bid. The typical buyer's premium in
a real estate auction is 8% to 15%. You need to refer to the terms and conditions the
specific auction to ascertain the amount of the buyer's premium.
Q. What Are The Advantages To The Buyer In
An Auction Situation?
A. The buyer knows the seller is fully committed to sell. Auction agreements obligate the
seller to transfer title to the highest bidder in an absolute auction; the auction
agreement obliges the seller to transfer title to the highest bidder that meets or exceeds
the reserve price in a non-absolute offering. The buyer knows he is getting the property
at fair market price. The buyer feels comfortable with the purchase knowing that others
would have been willing to pay about the same amount for the property as the bid. The
buyer sees many offerings in the same place at the same time and is able to make market
comparisons quickly and easily.
If you have any other questions, feel free to
call Premier Auction Group at (727) 785-4300 or toll free at (800) 554-9824 or e-mail us
at info@pagre.com. |
