Purchasing at Real Estate Auctions

   
   
   

If you are new to real estate auctions the information below should answer many, if not all, of your questions. Feel free to contact a company representative if you require additional help.

Select a topic:

Before the Auction

Types of Auctions

Registration

Bidding and Buying

Contracts and Deposits

Financing

Closing

---

Before the Auction

Q: I've never bought real estate at an auction; how does the process work?
A: Buying real estate at auction is a very simple process. However, it is important for you to be prepared prior to auction day so you will be an informed bidder. You should inspect the property during one of the scheduled preview dates and carefully read all of the information contained in the Property Information Package.
• Q: Why are properties sold at auction?
• A: Owners make a wise business decision to sell property in a one-day sale rather than continuing to incur carrying costs and negotiating in a manner associated with conventional marketing. Sellers are motivated to sell and offer you an opportunity to purchase desirable property at a substantial discount.
• Q Where can I find information regarding the homeowner's documents?
• A: At each of the property inspections and at the auction.
• Q: What are the advantages of buying real estate at auction?
• A: Buying real estate at auction allows you to experience a quick sale and closing, eliminates negotiations, and give the assurance that the price paid was market value.
• Q: Whom do I talk with if I don't understand the auction contract?
• A: Contact Christenson-Elms or consult with your attorney. It is very important for auction buyers to be educated and informed regarding the auction process. Make sure all questions and concerns are answered before you attend an auction.

> Back to menu

Types of Auctions

• Q: What is meant by "Absolute Auction?"
• A: Real Estate being sold "Absolute" means that the property will be sold to the highest bidder, regardless of the high bid price.
• Q: Which properties are sold "Absolute?"
• A: The number of absolutes to be sold absolute is found in the auction's Property Information Package. The successful bidders are given the option to select the property of their choice from the properties displayed in comparable groups on the Available Board. The Seller retains the right to add to or remove properties in the groups displayed.
• Q: What is meant by "Reserve Auction?"
• A: Real Estate being sold "Reserve" means that the Seller retains the right to accept or reject any bid for the property.
• Q: What is meant by "Minimum Bid Auction?"
• A: Real Estate being sold with a "Minimum Bid" means that there is a published minimum bid the the Seller will accept. Bidding starts there and will be sold to the highest bidder above the minimum bid price.

> Back to menu

Registration

• Q: What is required in order to bid at an auction?
• A: You MUST register on auction day and receive a Bidder Card in order to bid. At registration you must present to the Registrar (not to be collected) a Cashier's Check made payable to yourself in the amounts listed in the Property Information Package. Personal checks, company checks, money market checks or letters of credit will not be accepted. Cash cannot be accepted due to security reasons.
• Q: Do I need to be represented by a Real Estate Broker in order to buy at the auction?
• A: No. Most buyers are not represented by a Broker.
• Q: How do Brokers register their prospects?
• A: Brokers must register each prospect individually prior to the auction on a Christenson-Elms Participating Broker Agreement Form. Complete requirements are found in the auction's Property Information Package.

> Back to menu

Bidding and Buying

• Q: How is the bidding conducted?
• A: Auction are conducted by open bidding. As a bidder, all you need to do is hold up your bidder card and call out your bid, or tell your Bidder Assistant what amount you want to bid. The properties being sold are shown on the Available Board located near the Auctioneer. As the properties are sold, they are removed from the Available Board and listed on the Sold Board.
• Q: What is meant by "Suggested Opening Bids?"
• A: Suggested Opening Bids are the Auctioneer's recommendations of starting bids. From that initial bid you would increase your bid in increments as called out by the Auctioneer until you reach your highest bid price. Suggested Opening Bids are not minimum reserve figures.
• Q: Can I buy more than one property?
• A: Yes. You just need to bring and present a Cashier's Check for each property you intend to purchase.

> Back to menu

Contracts and Deposits

• Q: What happens once I have become the successful high bidder?
• A: You give your Cashier's Check and Bidder Card to your Bidder Assistant. You then move to the contract table where you endorse your check and complete the Contract for Sale and Purchase. Once you have completed all the paperwork, you then set a date for a closing appointment.
• Q: Do I have to make any more deposits other than my initial deposit before closing?
• A: You must increase your initial deposit to a total of 10% of the purchase price upon execution of the contract . You may pay this additional amount by personal check.
• Q: Is my deposit refundable if I change my mind after the sale and decide not to buy the property?
• A: No. If a buyer does not close for any reason on or before the closing date, the initial deposit is forfeited.
• Q: What is a Buyer's Premium?
• A Buyer's Premium is a percentage amount paid by the buyer and added to the highest successful bid to determine the contract price.

> Back to menu

Financing

• Q: Is financing available?
• A: Most auctions have some form of financing available. See the information listed in the auction's Property Information Package.

> Back to menu

Closing

• Q: When and where are closings held?
• A: Closings generally occur from within 30-45 days of an auction. The Property Information Package for each auction contains information about closing location, contact name of closing agent and phone number. The closing agent is usually at an auction to answer any questions and to receive buyer deposits.