Sold! Real estate auction can have advantages for buyers and sellers
October 8, 2018
Interested in buying the perfect piece of ground, but not interested in playing a waiting game or spending money over market value on a listed property? Agonizing over which neighbor to offer a property to first?
Real estate auction could be the solution to both dilemmas. With proper preparation, real estate auction can be an exciting and easy process for both buyers and sellers.
Thinking about buying?
According to Kraupie's Real Estate & Auctioneers, purchasing property can save buyers time and money as this method often translates to a motivated seller who is following an established timeline. Real estate auction also puts buyers on a level playing field because bidding is an open and transparent format and all bidders are working from the same terms and conditions.
Prepping to Buy
An individual who is interested in buying real estate at auction should familiarize themselves with the property and with the terms and conditions of the auction. Potential buyers should inspect the property, review sample purchase contracts, and speak with the agent representing the property to gather more details. Boundaries, personal property, irrigation details, and other factors should all be considered prior to making the decision to bid.
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From there potential buyers should make all necessary financial arrangements, so they are able to perform.
"Do your homework before the auction so you know what the property is worth to you and you can bid with confidence," said Darrell Kraupie, Kraupie's Real Estate and Auctioneers, Bridgeport Nebraska.
On Sale Day
Selling methods may vary from auction company to auction company and even from property to property. Some sell using multiple rounds, by the acre, lump sums, or offer different combinations of tracts. It is important for buyers to be familiar with the auction process and registration being used prior to sale day.
Buyers should also be on time. Real estate auctions often start with a review of terms and conditions that may include any changes from prior advertising. In addition, once the auction starts it can be over in a matter of minutes.
Using a proxy bidder may be advantageous to a buyer who is unable to attend or at risk of being late. However, using a proxy bidder increases the risk of having information incorrectly relayed to the buyer about the sale.
"It is always in the buyer's best interest to be in touch directly with the selling agent to discuss bidding options and understand the latest information related to the property," Kraupie said.
Buyers should also be prepared for a successful bid on sale day, ready to sign a purchase agreement, and provide the necessary earnest deposit funds.
When a property has been advertised and all interested parties have been given an equal opportunity to buy, selling real estate at auction can assure that a property will bringing what it's worth.
"Auctions differ from other methods of sale in that they work in most markets. No property or is too big or too small to sell at auction. We've sold properties for hundreds of thousands of dollars more at auction than sellers and/or brokers would have ever considered offering them for at private sale," Kraupie said.
Selling real estate at auction comes with a designated timeline for closing and exchanging monies. The terms of the auction are set in advance, so all parties are treated equally. Down payment will be given on sale day with no contingencies, making for a clean sale.
Sellers should do their homework and familiarize themselves with how auctions work. At many auctions the final sale is subject to seller confirmation or subject to reserve. The seller should have a price in mind based on the current market and be prepared to make the decision to sell. When bidding reaches the chosen threshold, the seller can tell the auctioneer that the property will sell beyond that point regardless of price.
Choosing an Auctioneer
It's important to hire a reputable professional real estate auctioneer. A reputable auctioneer is one who has been in business for an extended period of time and continuously provides successful results.
The right professional will have a firm grasp of their client's goals for the property and be able to advise them on the current market, guiding them through the process to a successful outcome. They will fully understand the property, its characteristics, and the local factors that could affect the sale. They will also have knowledge of potential buyers, locally and nationally, for the type of land in the area.
"Experienced auctioneers will recognize and understand the difficulties a property may face and have the required knowledge to resolve them, making a big difference in the seller's experience and dictating the profitability of the transaction," Kraupie said.