The Inside Story About How Real Estate Auctions Work
Hey Bidder, Bidder!
I’ve long been curious about how real estate auctions work.
My curiosity got the best of me recently, so I spoke with a respected local real estate auctioneer to learn more about real estate auctions.
Here’s what I learned: (other than the fact that auctioneers talk funny)
Type of Sale
- Real estate auctions are usually “live” onsite auctions with buyers present during the auction.
General Process
- Buyers must register and provide proof of funds or pre-approved financing.
Earnest Money
- Winning bidder must submit 5% non-refundable earnest money.
- Earnest money is held by a designated title and escrow company.
Contingencies
- Real estate auctions are “absolute” with no contingencies.
Inspections
- Bidders may have the property inspected at their own expense prior to the auction.
- The property is transferred “as is” with the seller making no repairs.
Financing
- Bidders may arrange financing, but they must provide a non-contingent loan commitment prior to bidding.
Commissions
- The seller pays the auctioneer a commission.
- The auctioneer pays the buyer’s agent commission if the bidder is represented.
- If the bidder is unrepresented, the auctioneer receives the buyer’s agent commission.
Buyer Premium
- The successful bidder pays the auctioneer a premium (of the purchase price) at closing.
Agency Representation
- Bidders can be represented by their own agent at the auction.
- The auctioneer pays the buyer’s agent commission.
Summary
Real estate auctions aren’t for everyone, but they provide immediate sales results and closable sales without the uncertainties of traditional real estate transactions.
You should have your own agent when buying at auction.
I can represent you, as a bidder, at a real estate auction.
My auction services include:
- Market Analysis
- Coordinate inspections
- Provide market insights
- Contract review
- Coordinate escrow processing
- Review closing documents
- Attend closing appointment
For more information, please call me at (208)938-5533 or e-mail me.
Free Advice: Don’t raise your hand if you don’t want to buy the property!
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Stated terms above were obtained from one specific auctioneer.
Other auctioneers may have different terms and/or policies.
