Selling Your Property at Auction
We are often asked why people would want to sell their real estate by auction. The simple answer is that the Auction Method produces a prompt sale at fair market value.
This outcome is the result of an intensive marketing campaign that attracts all serious buyers to a single event - your real estate auction. Gathered in one place at one time, bidders compete against each other for your property, creating an ideal selling environment for achieving fair market value.
Once your property is sold, the short timetable from auction to closing is also a benefit. As a result of our "fast track" approach, you will be able to reduce the high costs associated with holding property, and you will be free to move forward sooner on any new purchases you plan to make.
Below are answers to many of the specific questions we are asked regarding selling real estate via the Auction Method. Once you are ready to discuss selling your property - or if you have additional questions - give us a call. Our Real Estate Auction Specialist will be glad to assist you.
Frequently Asked Questions for Sellers
What are the advantages of auctioning real estate versus listing it at a stated price?
Unless sold quickly and efficiently, real estate can become an expensive liability (taxes, maintenance, insurance, etc.). In addition, the process of hosting repeated showings and open houses can be disruptive and frustrating if a serious buyer does not come forth. Auctions create a sense of urgency and produce true fair market value. Simply put, when a group of serious buyers are brought together to compete, it drives the price upward. The competitive atmosphere then generates its own "buzz," which leads to even more spirited bidding. As a result, auction is an effective method of marketing that offers you the potential to receive more money for your property than you would have asked if pricing it outright.
What is "fair market value"?
Fair market value is the price for which a property will sell on the open market between a willing buyer and a willing seller, neither being forced to buy or sell as of a specific date. Since auctions are the purest form of free enterprise, where the laws of supply and demand prevail, fair market value is the price that a property will fetch at a well-advertised auction. Other factors that come into consideration are location, age, condition, quality, size and desirability.
What types of properties sell at auction?
All types. CENTURY 21 Grand Auctions has sold vacant land, building lots, single-family homes, multi-family homes, commercial buildings, condos, townhouses, subdivisions, and industrial buildings.
What determines whether my property is a good candidate for auction?
The most important factors are your motivation to sell and the marketability of the property. The ideal candidate for the Auction Method would be a motivated seller who owes less on the property than what the current market is expected bring. Factors such as condition, location and amenities are also key.
Can I auction a property that has a mortgage, taxes or liens owed?
Yes, most sellers have a mortgage and/or other liens on their property. You have until the closing to pay off any outstanding debts and provide insurable title to the successful bidder.
What do you mean by "insurable title"?
If a New York State title insurance company will insure the property at closing, you have completed your obligation to the buyer. All CENTURY 21 Grand Auctions property offerings are sold with good, insurable titles and no liens, judgments, mortgages or back taxes. If the title cannot be cleared, the down payment is refunded to the buyer.
Are there different kinds of real estate auctions?
Yes, auctions can be "absolute," "subject to confirmation," with "reserve," or with a "stated minimum." When discussing the auction option with our Real Estate Auction Specialist they will review all of your options in greater detail to help you determine which options works best for you.
What does "absolute auction" mean?
A property that is sold at absolute auction means that it is selling to the highest registered bidder regardless of price. There is no minimum, and the seller cannot reject the highest bid attained at the auction.
What does "subject to confirmation" mean?
It means that the property is being offered to the highest bidder, subject to the seller accepting or rejecting the bid. Most CENTURY 21 Grand property auctions are conducted subject to seller confirmation.
What is a "reserve" auction?
It is similar to the "subject to confirmation" auction, except that there is an undisclosed reserve dollar amount set by the seller. The property cannot be sold unless the bidding meets or exceeds the reserve.
What is a "stated minimum bid" auction?
It is an auction at which the seller announces the minimum bid before the auction starts and will sell the property once that bid is reached or exceeded. For example, if a property "shall sell at absolute auction at or above a minimum of $41,237," if anyone bids $41,237 or more, the property will sell.
How does CENTURY 21 Grand Auctions get compensated for services?
The buyer pays our commission in the form of a buyer’s premium. You, as the seller, do not pay a commission; however, you are responsible for the marketing expenses. For our part, CENTURY 21 Grand Auctions will provide you with a budget and timetable, and we will execute the marketing.
What is a buyer’s premium?
A buyer’s premium is that portion of the commission paid by the buyer. It is usually a percentage of the bid price. The total sale price includes the high bid amount plus the buyer’s premium. For example, if a property sells for $100,000 and the buyer’s premium is 10%, the buyer will pay a total sale price of $110,000. At closing, the seller will receive $100,000 and CENTURY 21 Grand Auctions will receive $10,000.
What is the usual timetable for a real estate auction?
Typically, we recommend allowing 30 days from the time your property is listed until the auction date. This schedule ensures we have enough time for brochure distribution, posting signage, several rounds of advertising, and previewing. If this time frame is not workable, we will explore other options with you.
What type of marketing campaign will you use to sell my property?
CENTURY 21 Grand Auctions conducts an extensive promotional campaign for your property. The plan includes advertising, signage, a website listing, e-mails, faxes and illustrated brochures. National, regional and local ads are run for three-and-a-half weeks prior to the auction. Brochures are mailed to adjacent property owners, several hundred neighbors, our database of proven buyers, and cooperating real estate companies. The timely marketing creates a sense of urgency, which drives the most serious buyers to your auction.
Where is the actual real estate auction held?
Depending on the location and type of property, we will either conduct an "on-site" auction at the property or an "in-house" auction at our Auction Center. On-site auctions are held inside a building or under one of our tents. In-house auctions are held at our Auction Center, utilizing our professional presentation equipment and full range of amenities, including seven phone lines, electronic credit card processing, 14 networked computers, a backup generator, indoor seating for 400, 3.5 acres of parking, restrooms, food service and more. We will do a free site analysis for you to determine which would be a better auction environment for your specific circumstances.
I have not seen a real estate auction before. Can I come to an auction just to watch?
Absolutely, we encourage anyone to attend and watch the bidding. You will be entertained and amazed at the process. Best of all, it's free.
How do I know whether potential buyers are qualified to buy my property?
We use a proven system to get all serious bidders on a level playing field before competing for your property. When registering, bidders must meet the following criteria: (1) provide a valid form of positive ID (such as a driver’s license); (2) sign the terms & conditions agreeing to the rules of the auction; and (3) submit a bank check, guaranteed funds or cash for their initial down payment. No one may participate unless they have properly registered. Furthermore, after the property sells, the successful bidder will sign a bid acknowledgment form and a no-contingency purchase & sale agreement, and provide a second down payment representing the 10% buyer’s premium. The bidder will agree to close within 60 days, and that "time is of the essence," meaning that if they fail to comply, they have agreed in advance to forfeit their down payments and be responsible for re-marketing costs and any legal fees involved.
Will I sign an agreement if I decide to sell my property at auction?
Yes, you will sign a real estate listing agreement provided by CENTURY 21 Grand Auctions. If you would like to review a standard copy of our agreement before signing one for your property, we will furnish one upon request.
What paperwork will I need to provide if I list my property?
CENTURY 21 Grand Auctions would like to have copies of any available documents pertaining to your property, such as the deed, the survey, the tax ID number, and a recent tax bill. We also have a Property Fact Sheet for you to fill out, which we will use to describe the property in our brochures and ads.
Will potential bidders be able to view my property prior to the auction?
Yes, in addition to the website listing, ads and direct mail brochure, we also offer free preview by appointment. The preview is an opportunity for buyers to closely examine individual properties prior to the auction. We strongly recommend that all buyers preview properties before bidding, and that they take advantage of the opportunity to bring their contractor, home inspector or buyer’s broker with them for inspections.
What can I expect on auction day?
CENTURY 21 Grand Auctions will provide a professional team of auctioneers and bid assistants, plus all of the equipment necessary to conduct the registration process and auction. We will give a presentation on each property prior to soliciting bids. Once the auction begins, the auction team will work with the buyers to obtain the highest possible price. Immediately following the sale of the properties, contracts will be signed, down payments will be placed in escrow, and you will be on your way to closing.
What is a "bid assistant"?
A bid assistant is a staff member, usually one of the auctioneers not currently selling, who watches the crowd for bids. Sometimes called "bid spotters" or "ringmen," they are extensions of the auctioneer. It is often difficult for the auctioneer to see all the bids coming from a large crowd; the bid assistant listens to the "chant" of the auctioneer and scans the room for the current bid. If a bid assistant yells out "yup," the auctioneer knows that he has the current bid being asked for and will proceed to ask for the next bid.
Where does the bidding start?
At CENTURY 21 Grand Auctions, bidding starts wherever the bidders want to start it. As a seller, it is important to remember that setting a minimum starting bid is not essential, because it is where the bidding ends that is important. The auctioneer will always try to get the bidding started at a realistic level, but if there are no bids, he will drop down to a lesser amount and repeat this process until the bidders begin bidding.
What is a bid acknowledgment form?
The successful bidder is required to sign one of CENTURY 21 Grand Auctions bid acknowledgment forms at the conclusion of the bidding. The form has the description of the property that he bid on, the bid, the Buyer Premium, the total with Buyer Premium and his bid number. This form verifies that the bidder agrees that he is the high bidder.
When and where does the closing take place?
CENTURY 21 Grand Auctions recommends 60-day closings. However, some sellers opt for 30- or 45-day closings for their auctions. The closing is usually at the seller's attorney's office or at the office of the lending institution.
Is the closing different from any other real estate closing?
No, the closing is the same. The main difference between private treaty selling and the auction method is how the purchase price is achieved. Once the auction is over, your attorney and the attorney for the buyer get together and arrange for the closing in the customary manner.
What happens if the high bidder fails to close?
CENTURY 21 Grand immediately notifies the backup bidder in order to secure a new purchase & sale agreement.
What is "high bidder's choice," and when is it used in a real estate auction?
Properties that are similar (such as residential lots) may be sold using the high bidder's choice method. The auction is conducted to achieve a high bid, then the high bidder may choose any or all of the lots in the group, each at that high bid amount. For example, if the bidder chooses three lots, the high bid is multiplied by three. This process is repeated until all lots have been auctioned.
What does "auction by the acre" mean?
Land parcels are often offered "by the acre," which means the high bid is multiplied by the number of acres to reach the total purchase price. For example: 150 acres x $500/acre = $75,000
Direct Comparison
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Auction Marketing |
Traditional Brokerage |
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Property is showcased individually throughout the entire marketplace |
Property is one of many others being advertised and shown |
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Marketing period required is accelerated to 60 days or less |
Property is likely to remain on the market for several months |
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Advertising is extensive and very visible, exclusively featuring your property |
Advertising is general and much reliance on the MLS |
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All buyers are forced to act on your time schedule — time is of the essence |
Lacks the ability to motivate buyers, forcing you to wait for their schedule |
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Uses the auction concept to create urgency and provoke immediate buyer interest and offers |
Price reduction is encouraged in an attempt to create buyer interest and activity |
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Realizes the property's true market value |
Is limited because the property is unlikely to sell for more than you ask |
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Eliminates the guesswork in determining the asking price for the property |
Presents a dilemma determining what to ask for the property. The seller never wants to overprice, yet recognizes the consequences of underpricing. |
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All conditions of the sale are set from the beginning, eliminating all negotiations |
Sellers are forced to negotiate all aspects of the sale |
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Secures a contingency-free contract |
Contingencies are common and spoil many deals |
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Seller approves marketing budget |
Broker typically spends the least amount possible to advertise the property, |
1. THE SELLER PAYS NO COMMISSION!
Our commission is paid entirely by the Purchaser.
Our company uses the nationally accepted Buyer's Premium which amounts to a percentage of the high bid tendered at auction. This amount is then added to the bid in order to achieve the total contract price. Simply stated, you will receive the whole bid amount at the closing table and we retain the Buyer's Premium as payment for our services after the transaction closes. You do not pay us a commission.
2. GOOD PROPERTY SELLS WELL.
("Less desirable" property sells eventually.) The axiom, "location, location, location" determines the measurable difference between property values for similar kinds of properties, but when there is a vast difference in "property condition," value widens greatly. We realize that there is an emotional attachment involved on the selling side of
a real estate transaction, but one must begin to ask objectively, “What would I pay for
the property?” Begin looking at your property as a prudent buyer would. What is the appearance?
Does everything operate properly? Does the property demand major/costly repairs? If your
thought process is aligned with an accurate view of your property's physical well being, then you will be that much closer to a successful transaction. (We often think of our business not
as a realty business, but as a reality business.) The overriding reality of every successful real estate transaction is a ‘meeting of the minds,’ when the seller and buyer agree upon price, and therefore indirectly, the property's condition.
3. MARKETS CHANGE.
The real estate market in our twelve county service region has
increased over the past few years, and yet, some people may be holding property that has actually lost value over that time due to the lack of maintenance, surrounding area adverse developments and a variety of other factors. Then again, there may be a good reason to sell now such as a better opportunity for you in another property. What you need to assess is the time-value of money, which calculates what the dollars in your hand from a sale today will be worth in the future given wise investing, versus the costs associated with holding your current real estate over a longer period of time in hopes of getting a higher price later. Here are a few additional items to consider:
A. Would you like to stop making the mortgage payments on this property? Yes - No
B. Do you want to stop paying the land and school taxes on this property? Yes - No
C. Would you like to stop the high costs associated with insuring this property? Yes - No
D. Do you want to rid yourself of the potential liability from owning this property?Yes - No
E. Would you agree that by selling now, you could move forward with your life? Yes - No
(If you answered “Yes” to any of these questions, please ask a CENTURY 21 Grand Centified Auction Consultant for an “Auction Candidate Evaluation Worksheet " now.)
4. PLANNING TO SELL YOUR PROPERTY.
We believe that thorough and careful planning is the best way to sell your real estate. While other methods use a mundane "list and wait" approach, we are actively working towards the Auction day when we will sell your real estate. Several of the properties we have represented in the past never even made it to auction! Why? They were sold before the auction. We assist potential buyers in making their pre-auction offer to you. It must be in the form of a "No-Contingencies" written Purchase & Sale Contract (NOT A BINDER!) and accompanied by a substantial earnest money down payment (Typically ten percent of their bid plus a flat rate amount.) For example, an offer of $150,000.00 means that we will have $20,000.00 in hand at the time of the offer being presented to you. You can choose to accept the offer and declare your property - SOLD!
Our master timetable establishes what we need to do every day on the way toward your auction: research public records, create custom signage, create and place ads, assemble property fact sheets, upload web info, etc. Our plan also has the flexibility to be adjusted if we see that it is in our seller's best interest. Remember that you are in control of accepting the high bid tendered. Should you decide not to accept the competitively achieved high bid at auction, you will be in possession of the best property appraisal available – created by active, interested buyers – and, you will still own your property.
5. AGGRESSIVE MARKETING SELLS REAL ESTATE.
There are two kinds of marketing effort that we will coordinate to sell your property: the kind we pay for and the kind you pay for. We will gladly do nearly 100% of the work!
A. We will include your property on our website from the time of your listing. Our company conducts auctions about every ten weeks (sometimes more!) with a database of several thousand people for each event. We have over 50,000, current, E-mail addresses for people seeking to purchase New York real estate.
B. We will promote your property on our popular website address: Century21Grand.com, as well as on the website of The New York Times and on other sites we are affiliated with.
C. We will effectively notify the brokerage community in our twelve County service region
about properties we have listed and how we are willing to share our commission with them.
D. We will have you pay a pre-determined advertising plan at the time of your listing with us. This contribution will be combined with that of other property owners (if applicable), and will be professionally managed by our in-house marketing experts. We design your ads, create text copy, flyers, brochures and direct mail pieces as needed. By providing these services in our office, we control all aspects of the Accelerated Marketing Plan and pass the savings of our ad discounts along to you through your budget. Our annual marketing purchases provide generous discounts – we give you the discount and do not charge any fees to manage your plan. Our efforts will be rewarded by a successful auction event.
. .
6. DO YOU QUALIFY?
Our clients are motivated sellers, positive thinkers and proactive decision-makers. Are you one of these people? The "'Auction Method" of marketing real estate is very successful, but it is not for everyone. Take a few moments to call a CENTURY 21 Grand Certified Auction Consultant to get the self-evaluation worksheet to see if you qualify. (see below)
7. ACT NOW.
The best time to begin planning for a successful auction is today! Once you qualify for
admission to our program, start collecting the information you will need to sell your property: A) names, addresses of all property owners, B) a copy of the real property tax bill, C) a copy of the property survey or tax map, D) complete and accurate directions to the property from a major roadway or town that anyone can use, E) a copy of the deed or title with ‘Schedule A ‘ F) copies of leases and a property income statement for commercial/multi-family property and, G) positive attitude about the prospects of selling your property in a competitive marketplace.
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