sold signReal Estate Auctions have gained credibility and popularity among the general public over the past few years. They are a viable alternative to conventional marketing programs. They are an innovative marketing tool which can benefit buyers and sellers. In a seller’s market,

  • Auctions can be an ideal way to get top dollar for your house and avoid the agonizing question of whether the first good offer you receive is the best offer you’re going to get.
  • Auctions can accelerate a property sale and maximize a property’s selling price.
  • Auctions are another means in which to bring buyers and sellers together.
  • Auctions provide a quick sale, with closing in about half the time of a typical real estate sale.
  • Auctions provide reassurance that property value and market prices can be found. For example, when the people in attendance at the auction see what value others are putting on the property, they may make up their mind to stay in the bidding on the property.
  • Remember that the conventional method of selling real estate puts a buyer into the action blindly not knowing where the contractual bidding is at; everyone at auction is in the same playing field & has an equal chance to get it. Therefore, conventional methods might sell a property on one conditional offer leaving the exposure to other potential buyers “out of the action” therefore eliminating a higher selling price.
  • Real Estate by Auction, sends a message to the buyers that there is a serious seller.  Buyers therefore know that they are not wasting their time.
  • The auction method draws attention to a property, and, the hype or sense of urgency to buy a piece of property can be created.

Frequently Asked Questions about Real Estate Auctions

  • Frequently Asked Questions about Real Estate Auctions

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  • What is a real estate auction?

    A real estate auction is a method of buying and selling real estate through the medium of an auctioneer. Auctioneers know that the best products around the world are sold by public auction eg. thoroughbred horses, art and real estate.

  • What are the benefits?

    What are the benefits of a real estate auction?

    The real estate auction is a “win-win” situation for everyone involved. The seller disposes of properties quickly and efficiently, 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 sellers have the assurance of watching the true market value emerge as the bidding process progresses.

  • Are all properties suitable for auction?

    Most properties can be sold by public auction. These include residential property (incl. apartments, condominiums, single family dwellings, farms, cottages), commercial property and vacant land. Sound developments can be marketed effectively through public auction. The only time we do not accept selling property by auction is if we feel that we cannot get the price you want. We at Hands Auction will not selfishly spend your advertising dollars just to get our name in the paper.

  • What if the property does not sell?

    What if the Property Does Not Sell at Auction, Is It Still Possible to Market It Conventionally?

    Yes. But do keep in mind that the auction marketing method has already exposed the property to a large part of the buying public. The prices reflected to purchase that particular piece of property conventionally may likely exceed fair auction prices because of high-end carrying costs that will have to be incurred.

  • Can I be sure of getting a fair price?

    The only genuine measure of the value of real estate is what someone else is willing to pay for it. An appraisal is only an informed opinion. It is not an offer to buy. The real measure of the value of real estate, at any given time, is what it will bring under competitive bidding from informed and motivated buyers.

  • Do auctions depress home values?

    No. In fact, Real Estate Auctions reveal the true market value of a property because auctions are conducted in an open forum where all bids are known, and participants are given feedback on the property’s value. At auction, the values settle at the level the market can bear.

  • How are properties advertised for auction?

    The various forms of advertising are newspaper advertising in local, regional &/or national papers, internet, advertising signs on the property, sale bills or brochures, trade journals, magazines, radio ads, possible TV & cable ads and phone calls to potential clients. A qualified and experienced auction company will know which form of advertising, where to advertise, and, which is best suited for the property. A fair auctioneer will noteably advertise the property in retrospect to suitability not just to promote the auctioneer & company.

  • Under what terms does a property sell at auction?

    Usual terms are that the highest bidder makes a deposit (either a percentage of the purchase price or a stated set amount). Buyer and seller immediately sign 3 offer to purchase contracts. Closing date is usually 30 days, sooner or later, and the balance of monies and adjustments are made at this time to appropriate lawyers. Properties sell “as-is” with no conditions or warranties at an auction. Note: potential buyers are encouraged to phone the auctioneer prior to auction date to view and inspect the property.

  • What happens to the deposit money?

    What happens to the Deposit Money if Buyer Decides at a Later Date Not to Buy the Property ?

    If the highest bidder is unable to finalize the transaction, the deposit money is forfeited regardless of the reason. We at Hands Auction have not had any property auction, transaction, fall through. If the seller is unable to give a clear title etc., the buyer’s deposit is refunded.

  • How much does an auction cost?

    Auctioneers, like real estate brokers charge a commission of the selling price. This commission is called a buyer’s premium and it is charged to the buyer, not the seller. The reason being for a win-win situation to occur, the seller does not have extra carrying costs and can therefore succumb to his/her rock bottom price (knowing they will be receiving cash with no conditional offers upon closing). The buyer pre-determines a set amount to bid (figuring in the additional buyer’s premium) ahead of the auction sale. The only out-of-pocket expenses for the seller are advertising costs and his/her own legal fees. The buyer is responsible for his/her own lawyer fees as well. Buyer’s Premium is typically 10%.

  • Do "Estate" real estate sell well at auction?

    Since estate auctions are so well attended, competition is most often fierce. Why not take advantage of the exposure when listing the contents of the house & offer the real estate at the same time. The cost of advertising tthe extra real estate is quite minimal. To an executor this service must be very appealing rather than selling the contents of the house by public auction & then having to wait for the real estate to sell later on.

  • Why should real estate agents look favourably upon auctions?

    Real estate agents are discovering the benefits of real estate auctions. They are realizing that auctions promote activity in an industry that thrives on activity. Agents can become involved in auctions themselves. If an agent brings a buyer to an auction and that buyer purchases the property, the agent can receive a commission from the auctioneer. A real estate agent can also call upon the services of a licensed auctioneer to conduct an auction for suitable property. A smart real estate agent knows that one of their developments sold by public auction not only brings in the splitting of commissions but importantly dozens or even hundreds of prospective buyers who are now in the real estate agent’s market area.

  • Real estate auctions are sometimes thought of as a "Fire Sale" for those who cannot meet payments. Is this true?

    Many people believe that auction means bargain but since auctioneers understand the psychology behind the bidding, he/she uses it to draw the buyers ensuring that the selling price is good for the seller. Regular auctions have always received a very positive image, unfortunately real estate auctions have occasionally suffered a poor image. But given away, No. They are only misinterpreted because in actuality the price is the reflection of a smart seller, one who chooses the cost-effective, accelerated method of selling property rather than labouring for months or years to sell vacant land, a home or rental property. This accelerated sale allows the seller to eliminate all long-term costs. These cost savings to the seller are passed along directly to the purchaser in the form of reduced prices. Therefore, a “win-win” situation has been created. Sellers can move on and buyers can purchase quality properties at fair market value. Always remember that the best articles in the world are sold at auction when pricing becomes difficult. An auction provides control, virtually creating a marketplace to sell your property at your established price, or above your reserve bid.

  • What factors determine success at an auction?

    - Desirability of the property being sold ~ including location, condition and surrounding properties.
    - A marketing and advertising plan geared to prospective buyers.
    - Realistic expectations of the seller.
    - Conducting the auction in a professional manner and follow-up through closing.
    - Knowing your property and selecting the type of auction that best suits the property and the seller’s needs (auction with reserve bid or no reserve bid)

    Auction with a Reserve Bid: The seller has a price pre-determined at which the property will be sold. The auctioneer is the only other person that knows of the price. When the auctioneer takes the last bid at the auction, he/she will recess with the seller to discuss whether this property will sell subject to seller’s reserve bid or approval.

    Auction with No Reserve Bid: The auctioneer will accept any & all bids irregardless of the price.

  • What are the advantages to the seller in an auction?

    - Offers the seller another option.
    - Creates competition among buyers – auction price can exceed the price of a negotiated sale. An auction generates excitement and heightens buyer interest.
    - Property is exposed to many prospects.
    - Property is sold as-is, where-is and how-is without contingencies.
    - Auction brings interested buyers to a point of decision – they must act now or lose opportunity to purchase.
    - Auction is a true market forum – the highest bidder will pay the lowest price that a seller will accept.
    - A seller knows exactly when the deal will sell and close.
    - A seller maintains control of the property depending upon auction type and he/she participates in the sale process.
    - Auction reduces the time the property is on the market.
    - Auction eliminates numerous and unscheduled showings. We at Hands Auction conduct all showings, individually, rather than having open-houses. We feel this is a very important factor when it comes to selling your property.
    - Auction takes the seller out of the negotiation process.
    - Auction is an aggressive & advanced marketing program that increases potential interest of said property.
    - Seller is able to obtain liquidity.
    - Seller is able to move on to other investments.

  • What are the advantages to the buyer in an auction?

    - Purchase property at fair market value.
    - Never has to worry about paying too much.
    - Eliminates sometimes long negotiating periods.
    - Reduced time to purchase property.
    - Gains confidence as they compete at auction.
    - Feel better knowing that there are other potential buyers and there is a contending bid just one increment under purchase price.
    - Buyers know property owners are motivated to sell.
    - Buyers know that property owners will sell at their lowest price possible.
    - Buyers set their own purchase price.

  • How can I find out more about real estate auctions?

    Watch your local paper or visit our web site www.jimhandsauction.com to see when an auction is happening in your area. At Hands Auction you are welcome to attend any and all auctions without any deposit registration. Observing real estate auctions will give you a feel for what happens and how it happens. There is a definite blending of real estate knowledge and auction expertise that comes together to fulfill the seller’s and buyer’s needs. Real Estate Auctions are exciting, fun and a viable alternative to traditional sales techniques.

    Please visit our News & Details Section on our Home Page for General and Real Estate Auctions.