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Auction FAQ 2018-07-10T00:35:51+00:00

Frequently Asked Questions

BENEFITS TO THE SELLER:  from Realtor.org

  • Buyers come prepared to buy
  • Quick disposal reduces long-term carrying costs, including taxes & maintenance
  • Assurance that property will be sold at true market value
  • Exposes the property to a large number of pre-qualified prospects
  • Accelerates the sale
  • Creates competition among buyers—auction price can exceed the price of a negotiated sale
  • Requires potential buyers to pre-qualify for financing
  • The seller knows exactly when the property will sell
  • Eliminates numerous and unscheduled showings
  • Takes the seller out of the negotiation process
  • Ensures an aggressive marketing program that increases interest and visibility

1Expediency:  Most auctions will only be a 60-90 day process.  That quick clearance includes time from listing to closing.  As a seller you will not have to spend a long term carrying costs for their property while waiting for someone to make an offer.

2.  Sellers: As a seller you will have multiple buyers/offers on hand at the same time! You will be in control of the selling process.

3.  Acceleration:  As a seller you will not have to wait on the potential buyer to procure a loan or appraisal.  Buyers know “at auction” that their bids are not contingent upon financing, so they are prepared and pre-qualified.

4.  Fair market value:  Auctions are recognized as the most efficient method to establish the fair market value in a capitalist economy today.

5. Marketing:  Auctions can aggressively market to a specific target audience, that increases interest and is not endless, continuing on for eternity, but for a specific time period.

6.  Under pricing:  Auctions are the best way to avoid under pricing.  The price is always negotiated upwards, not down!

7. Condition:  Properties are sold “as-is”.

8.  Mediation:  Auctions are the best way to mediate a sale with multiple sellers.

9.  Seller perks:
The seller can witness the sale of his property, either in
person or by online viewing.
The seller can pick the sale date and closing date.
Seller is not subject to multiple “showings” if the subject property is their home.  Generally, one open house is held for potential buyers to view the property.
Seller has the assurance that their property will be sold!
Seller is not involved in a long negotiation process.

10.  Competition: Auctions force competition between buyers providing the impetus to get them “off the fence”.  An auction price may exceed the price of a negotiated sale.

BENEFITS TO THE BUYER:

  • Smart investments are made as properties are usually purchased at fair market value through competitive bidding
  • The buyer knows the seller is committed to sell
  • In multi-property auctions the buyer sees many offerings in the same place at the same time
  • Buyers determine the purchase price
  • Auctions eliminate long negotiation periods
  • Auctions reduce time to purchase property
  • Purchasing and closing dates are known
  • Buyers know they are competing fairly and on the same terms as all other buyers
  • Buyers receive comprehensive information on property via due diligence packet

Types of Auctions

Q. What are the different types of Real Estate Auctions available to me?
A. Essentially there are three types of auctions:

1. Absolute Auction (or auction without reserve)
1. The property is sold to the highest bidder, regardless of the price.
2. Since a sale is guaranteed, buyer excitement and participation are heightened.
3. Generates maximum response from the market place.
4. Many sellers, including financial institutions and government agencies have begun to use this method more frequently.

2. Minimum Bid Auction
1. The auctioneer will accept bids at or above a published minimum price. This minimum price is always stated in the brochure and advertisements and is announced at the auction.
2. Reduced risk for seller as the sales price must be above a minimum acceptable level.
3. Buyers know they will be able to buy at or above the minimum.
4. The seller may, however, limit interest in the auction to only those buyers willing to pay the minimum bid price, and therefore it must be low enough to act as an inducement rather than a hindrance.

3. Reserve Auction ( an auction subject to Confirmation)
In this scenario, the high bid is reduced, in effect to an offer not a sale. A minimum bid is not published, and the seller reserves the right to accept or reject the highest bid within a specified time — anywhere from immediately following the auction up to 72 hours after the auction concludes. Sellers predetermine the price at which the property will be sold and are not obligated to confirm a sale other than at a price that is entirely acceptable to them. The main disadvantage of a Reserve Auction is that prospective buyers may not invest the time and expense of due diligence when there is no certainty they will be able to buy the property even if they are the highest bidder.

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Lange Auctions is an experienced and professional auction company located in the Kansas and Oklahoma area. We strive to maximize our Sellers profit while providing the high-quality service our Buyers expect.

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