Most auction companies prepare many types of marketing materials on each property, which you can obtain by calling the auction house. However, qualifying the property for the buyer’s purposes and their pricing goals is another matter. Qualified companies that provide real estate auction services can help you make decisions that meet your best interest. This will be done by helping you determine realistic goals and expectations within your resources so that they can find many options from which to choose. Specifically, the following information is recommended when considering an auction.
Entity of Seller
Sellers can be a developer, corporation, private owner, liquidating trust, municipality, financial institution, or government agency court ordered sale.
Reason for Auction: in most cases the basic auction documents will state that the seller is seeking to expedite the sales process. Ask questions, such as “why is an accelerated sale required?”
Examples include:
A - Is the sale directed by a bank in lieu of foreclosure?
B - Is the seller a liquidating trust that must sell the property by a specific date?
C - Is the auction directed by a court of some nature?
D - Is a corporation seeking to sell surplus properties in a timely fashion?
E - Is the auction part of a bankruptcy, estate, or foreclosure proceeding?
F - Is the auction being used as part of a condemnation proceeding?
G - Is a developer using the auction simply to close-out the remaining homes in subdivision?
Auctioneer
Requesting information on the company conducting the auction can help you determine the reputation of the company and therefore helps you evaluate: Seller financial standings and ability to close the transaction, and quality and condition of title policies.
Condition of Property
You must request information on the present condition of the property. Most auctions provide that you will accept the property in AS-IS condition, with all faults. In this case, you will not have an opportunity to inspect the property or supporting materials after the auction. Your winning bid at auction legally binds you as the Buyer.
Condition of Title: Again, in most cases the properties offered at auction are being sold in AS-IS condition. This means you must examine the title insurance advertised. The seller is then obligated to accept the highest offer over the stated minimum bid, butis not obligated to accept prices under the minimum bid. Minimum bids offer comfort to the buyer because they are certain of buying the property if they are the highest bidder over a specified amount.
It is also recommended that your attorney review all documentation prior to making any concrete decisions.
Keep this information in mind before choosing auction as the primary way to sell real estate.