1. Is auction experience required or preferred to bid at an auction?
No. While it does help to be somewhat familiar with the auction process, it is not necessary to have prior
experience. You have to start somewhere! If you do have time prior to the auction you are planning to attend, it might be fun for
you to go to some other auctions just to watch and ask questions. If there is no time for that or there are no other auctions
scheduled before yours, a good source of information is the auctioneer him/herself. They understand that some attendants will be
new, and they expect and encourage you to contact them ahead of time with questions!
2. Won’t an auctioneer be able to take advantage of my lack of experience on sale day?
No. It does not benefit the auctioneer in any way to have a property sell to any particular individual and the auction
process itself does not really lend itself to that sort of thing. The nice thing about buying at auction is it is a very honest forum.
Everyone knows who they are competing against, and at what price. The auctioneer’s position in the sale is simply to take bids
from all willing and able parties until a final price is met. One person calls a bid, another person increases it, a third may increase
over that, and when the auctioneer looks back to you to see if you want to bid again, you have the sole responsibility of choosing
whether or not you wish to continue. If you win the bid, you win the auction. Plus, all terms are given to you ahead of time so
there are no surprises.
3. Do I need to register to bid at an auction, or can I just show up and throw my hand up when I feel so inclined?
Yes you need to register to bid at auction, and no you cannot just jump into a sale that is already in-progress. Most
auctions will request that you pre-register before the day of the sale. This gives the auctioneer an idea of expected turnout, and
for you it means just one less thing you have to worry about on the day of the auction. You can contact the
auctioneer directly and they will probably mail, fax, or email you a form to fill out. Your bidding card will either be sent to you in the
mail, or you may just have to pick it up from the auction officials on the day of. Your bidding card is what tells the auctioneer you
are registered and are eligible to bid during the sale.
4. What kind of properties can be purchased at auction?
Just about everything can be bought and sold at auction! Livestock, automobiles, watercraft, technological equipment,
furniture, antiques, office goods, jewelry, clothing, artwork, novelties, seized storage units, and of course real estate. The list
could go on, but you get the idea. AuctionTracs focuses primarily on real estate auctions (also known as real property auctions),
and personal property being sold off the estate. In the areas of real estate auctions, you can purchase your next home, invest in a
distressed property for fixing up and flipping, buy a multiple-family home that you rent out, acquire a new business space for your
growing company, purchase land - both residential and commercial, and so on. Real estate auctions will sometimes be properties
that have been foreclosed on by a bank, or that the local government is disposing of to cover unpaid taxes and liens.
5. Who owns the properties being sold?
That really just depends on the property but here are some common scenarios. Sometimes it is being sold by the current
owner who is just looking for a quick way to sell his/her property or otherwise doesn’t want to fool with the drawn out process of
selling in the conventional way. Sometimes the owner has passed on and the property is in probate, and the estate is selling the
property at auction either to divide the profits between the heirs or to cover liens backed by the property. Sometimes the property
has been foreclosed on, so the bank is selling the property at auction to minimize holding costs. Sometimes the local government
has seized a property either for illegal activity, or simply for unpaid taxes, so they will dispose of it via public auction. Finally, there
are some auction companies that own real estate themselves, and they are selling the property.
6. What sort of guarantee will I be given if I purchase a piece of real estate at auction?
Typically, no warranties, guarantees, or promises of any kind regarding the condition of the property will be given. The
term you will hear most often regarding real property auctions is that they are sold “As Is, Where Is.” The benefit for someone
selling their property at auction, is that they are not required to furnish any allowances, repairs, credits, refunds, and the like, to a
buyer before closing or after the sale. It makes for a quick process with a “no strings attached” kind of outlook. For the buyer, it
means being very thorough with research and inspections to ensure you don‘t get stuck with a property you either don‘t want to
live in, can‘t afford to bring up to standard, or can‘t resell without losing money. The property may or may not have a clear title, a
fact which will be revealed to you prior to the sale. This is something that will play into your decision whether or not to purchase
the property. It is extremely wise to enlist the service of various real estate professionals who are trained and licensed in various
areas of real estate.
7. Who can I call on to get help when considering purchasing a piece of real estate at public auction?
A Buyer’s Agent is a valuable person who can do everything from pull comparable sales in the area so you don’t overpay
for a property, help you with pre-registration, assist in your financing arrangements, and refer you to other professionals as you go
along. If you will be financing the property, you will want to check with the auctioneer to see if that has already been arranged.
Sometimes auctioneers will have relationships with local banks, who will offer Non-Qualifying Terms. If you have an established
relationship with another lending source, however, the loan officer can be a great source of information as well. One of your
primary concerns, of course, will be the condition of the property. Since you will be granted no disclosures, warranties,
allowances, or refunds, it is important to seek the services of a licensed Home Inspector. His/Her fee is a small price to pay to
ensure you are spending your money wisely. In older homes, you may want to have a Lead Based Paint inspection done. Other
investigations would be to check for pest and rodent infestations, radon gas, mold/mildew problems, and the like. If you are using
the service of a Buyer’s Agent, they can help you arrange all of these inspections prior to sale date.
8. Should I inspect the property prior to purchasing it?
Yes! Not only will you want to be sure there are no structural or system problems, but you should see if the property suits
your needs in terms of location, size, functionality, and other important aspects. Remember, if you win the auction, the property is
yours and there will be no turning back. So definitely inspect the property prior to purchase. If you are unable to see the property
beforehand and/or have not had it inspected by a certified Home Inspector, then it is advisable not to bid on the property.
9. Will I be required to pay anything up front for the property if I win?
Yes. There is no fee to attend or bid at the auction, but if you win, you will be required to put some amount of money
down. Sometimes the down payment is a percentage of the purchase price, sometimes it is a flat, pre-determined amount.
Whatever this amount, be sure to find out what it is ahead of time and to have your proceeds available on the day of the sale.
10. Do I need to qualify for financing prior to the auction?
That depends. Sometimes a lender will have pre-set terms that many times are non-qualifying. What this means is that if
you win the bid and you have the required down payment, you get the financing terms irregardless of your other credit history.
Most of the time, an auction will stipulate a down payment to be paid when you win, with the balance due at closing (in
approximately 30 days). How you choose to furnish the down payment and balance at closing is up to you. If you are going to
finance these amounts, then yes you will most definitely want to attend to all that ahead of time. Remember, if you win the
auction, you must pay for it. To not have your financing set ahead of time is a risky situation unless you have the cash on hand to
cover it if the financing falls through.
11. I’ve heard that people who auction off their property are in usually in trouble and are desperate to sell. Does this mean I can
expect to pay below market value for auctioned properties?
Not necessarily. While yes, some properties that are being auctioned will be in some type of distress, nowadays
auctioning real estate is becoming as common as selling through more traditional means. Many times it is being auctioned simply
because the seller just doesn’t want to fool with all the time and hassle that can go into traditional listing techniques. Auctions
provide the seller a definite sale date, maximum exposure for marketing dollars, and a quick and stress-free closing lacking the
uncertainty of multiple contingencies, financing fall-through, and inspections. Because an auction brings all serious, willing, ready,
and able buyers to a point of decision, the seller can be sure that his/her property will sell for market value. Remember that a
property is really only worth what someone is willing to pay for it, and while a smart buyer will try to get a property for as little as
possible, they will be well versed in the conditions of the area and will be fully expecting to pay at price comparable to other sales
in the area. To expect to get a great deal on an otherwise desirable property is probably only setting yourself up for
disappointment. While it does happen, you shouldn’t base your decision to buy at auction solely on that fact.