Frequently Asked Questions
Online Auction Bidding
Not able to make it to one of our live auctions, but still want to bid from your computer or smartphone? No problem! Just use our mobile bidding app.To simplify the bidding process, we encourage bidders to download the Block Realty & Auction mobile bidding app, available in the iTunes App Store or on Google Play. Let us make bidding easier for you! Problems with or questions about Internet bidding should be addressed to paul@blockauction.com .
WHAT IS A REAL ESTATE AUCTION OR PERSONAL PROPERTY AUCTION?
A Real Estate Auction and or Personal Property auction is a method of buying and selling real estate or personal property. It is an intense and accelerated marketing process that involves the public sale of property through open, competitive bidding.
WHAT ARE THE BENEFITS OF AN AUCTION?
The auction method is definitely a win-win proposition for everyone involved. Auctioning of Real Estate the seller disposes of properties quickly and efficiently, thereby 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 motivated sellers have the assurance of watching the properties true market values emerge as the bidding process progresses. For both buyer and seller, fair market values for the property prevail. An auction creates competition among buyers and exposes the property to a large number of pre-qualified prospects. Because it is an accelerated sale; real property can often be sold within 4 to 6 weeks of listing. For the agent, auctions can mean an increased client and customer base as well as increased profits.
ARE ALL REAL PROPERTIES SUITABLE FOR AUCTION?
Most properties, are saleable by auction. Residential property (including town homes, condominiums, cooperative apartments and single-family homes), commercial property, vacant land even boat slips are sold at auction. One method used by our auction firms to analyze the market, property and seller situations is the two-thirds rule. A general explanation of the rule is that if two out of three parts (market, property, and seller) lean favorably toward auction, then auction should be offered to a seller as a viable solution for a sales option. As with all of the real property we look at, our firm strives to everything within our power to offer the best solution for selling your property or merchandise.
DON’T REAL ESTATE AUCTIONS DEPRESS HOME VALUES?
Not at all. 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 immediate feedback on the property’s value. At auction, values settle at the level the market can bear, neither elevated nor deflated.
UNDER WHAT TERMS DOES A PROPERTY SELL AT AUCTION AND WHO SETS THESE TERMS?
The seller sets the terms with the advice of the auction company. It is necessary to have “balanced” terms – terms and conditions set by the seller under which buyers bid and under which the winning bid is established. If terms are not set with buyers in mind, there will be none. Once terms are set, there are no contingency clauses on auction day. Usual terms are that the high bidder deposit earnest money (either a percentage of the purchase price or a stated set amount) and enter into a purchase contract immediately following the auction with the balance of the purchase price due usually within 30 days at the closing. The seller generally provides title insurance. Properties generally sell “as is” with no warranties expressed or implied. Since the only issue left is price, due diligence is done in advance of the sale such as preparations of information packages and inspection reports.
WHO USUALLY BUYS AT AUCTIONS?
Anyone can benefit from buying at an auction. Many people who buy real estate are first time home buyers who may otherwise be shut our of the real estate market. For them, the auction is a realization of a dream. Empty nesters and investors also comprise a large segment of the auction buying public.
HOW ARE AUCTIONS ADVERTISED?
This varies greatly depending on the type and value of the property or merchandise being sold. One of the essential underpinnings for a successful auction is a highly aggressive marketing program. Each auction has its own powerful promotion and advertising. Auction marketing is an intensive effort and a well-timed plan to create massive interest in the properties or merchandise available for sale. The advertising budget is established according to specific properties or merchandise and the type of market that’s needed to be reached. That budget is then broken down into various forms of advertising that will best target the market for the auction. The various forms of advertising are: internet, email, sale bills or brochures mailed directly to prospective purchasers and posted in public places, newspaper advertising in local and possibly regional or national papers, ads in trade journals and magazines, radio ads, signs posted on the property and possibly television and cable ads, and phone solicitation. Our qualified and experienced auction company knows which forms of advertising are best for a particular type of auction and its location and will facilitate everything from preparing the advertisements to placing them in the desired forms. The aggressive advertising hits large groups of buyers that will come and competitively bid on property thereby yielding true fair market value for a seller’s holdings.
WHY DO I NEED TO ADVERTISE?
typically an auction event has a shorter lead time. The shortened marketing time and reduced holdings costs allows them the luxury of an aggressive marketing program – usually in the form of internet online bidding, brochures, direct mail, newspaper ads – display and classified, trade journals, signage and possibly TV and radio ads. Depending on geographical location, value of the property; size of the marketing area (local – regional – nationwide). Once the budget for advertising is agreed upon between the seller and our company, we coordinate and place all advertising. The auctioneer does not get paid unless the property sells. The auction method of marketing is a direct barometer of the activity in the market place. The aggressive advertising informs and draws the buyers to the auction to compete for the property. A properly advertised auction will bring all interested buyers together at one time to do business, thereby producing the optimum results in a condensed time period and on a day, date, and time that suits the seller’s time schedule.
HOW LONG DOES IT TAKE TO ADVERTISE AN AUCTION, HAVE THE AUCTION AND CLOSE THE SALE?
The time frame varies depending upon the type of auction. Generally, the process takes 10 to 90 days from listing to sale. The auction itself may take anywhere from five minutes on a single property to several multi-day auctions.
WHAT ARE THE ADVANTAGES TO THE SELLER IN AN AUCTION SITUATION?
Buyers come prepared to buy. “Lookers” are eliminated because most often bidders must qualify through a deposit of a certified or cashier’s check. Auction brings interested buyers to a point of decision. Buyers feel that if all the properties are sold before the auction ends it represents their last chance to purchase a desired property. Sellers get maximum exposure for their properties. The auction marketing strategy differs from conventional advertising. It is more concentrated, therefore more intense and visible. High carrying costs are avoided. Through auctions, the seller is in control and knows that if properly priced, his property will sell on a certain date, which is usually within 30 days from the auction listing. By selling quickly, the seller is able to avoid high carrying costs such as insurance, real estate taxes, security and maintenance and is also able to benefit from the use of the monies to reinvest in other real estate or investment opportunities elsewhere.
WHAT ARE THE ADVANTAGES TO THE BUYER IN AN AUCTION SITUATION?
The buyer knows the seller is fully committed to sell. The auction agreement obligates the seller to transfer title to the highest bidder that meets or exceeds the reserve price in a non-absolute offering. The buyer knows he is getting the property or merchandise at a fair market price. The buyer feels comfortable with the purchase knowing that there is a contending bid just one increment under the purchase price. The buyer has negotiating power. The buyer can withdraw from the bidding at any time until the gavel falls. The buyer sees many offerings in the same place at the same time. He is able to make market comparisons quickly and easily.
CAN I BE SURE OF GETTING A FAIR PRICE?
The only genuine measure of value is what someone else is willing to pay for it. An appraisal is merely an informed opinion. It is not an offer to buy. The real measure of value of real estate or any merchandise, at any given time, is what it will bring under competitive bidding from informed and motivated buyers.
MUST I ACCEPT THE HIGH BID AT AN AUCTION?
Not necessarily. The auction can be structured in a way that gives the seller the right to accept, counter, or reject any bid without having to disclose the minimum acceptable price prior to the offering at auction.
WHAT ARE THE EXPENSES RELATED TO AN AUCTION?
In general, auction expenses include the auctioneer’s fee, marketing and advertising costs, and sometimes co-brokerage commissions. The fee varies depending on the type of auction and the type of market you need to reach. Typically, the auctioneer charges a commission as a percentage of the sale price. A complete marketing proposal is provided for the seller’s approval prior to signing. The auctioneer pays a co-brokerage commission, only if the highest bidder is represented by a registered broker in a real estate transaction.
IN WHAT CONDITION IS THE PROPERTY?
All properties will differ as to their condition, and are sold in (as is – where is” condition without warranty or guarantee of any kind (other than clear title). Bidders are strongly encouraged to inspect the property or merchandise prior to the sale.
