Types of Auction:
The property is sold to the highest bidder, regardless of the price. Since a sale is guaranteed, buyer excitement and participation is heightened. This generally flushes out the most buyers for a given property. It has been said that “having an auction is like building a pyramid: the broader the base, the higher you will build the peak”. So the more buyers you have, odds are that you’ll raise the sale price.
Minimum Bid Auction
The auctioneer will accept bids at or above a published price. This minimum price is stated in advertisements and at auction announcements. This is a reduced risk for the seller as the sales price must be above a minimum acceptable level. Buyer’s know they will be able to buy at or above the minimum. Since this will limit interest in the auction to only those buyers willing to pay the minimum bid price, that price must be low enough to act as an inducement rather than a hindrance.
Reserve Auction (or sometimes “Subject to Confirmation”)
In this case, the high bid is essentially reduced to an offer, not a sale. The seller reserves the right to accept any offer that is at or above their confidential price point. Seller’s determine in advance, a confidential number that is acceptable to them, and the property does not sell until a bid is received at or above that number. The main disadvantage of a reserve auction is that prospective buyers may not invest the time and expense to perform their due diligence if there is no certainty they will be able to buy the property even if they are the highest bidder.
Sealed bid auction
Buyers submit offers based on their perception of value for a given property. Typically the seller has the right to accept, reject or counter any offer presented. Generally speaking, offers are submitted and held until a given day/time when they are opened and evaluated to see which is the most advantageous to the seller. However, pre-auction date offers are generally encouraged and an offer could be accepted (or countered) prior to the given auction date. This is a form of a reserve (or confirmation) auction.
Some Auction Advantages:
The seller can select the date, time, terms & conditions when their property will sell, putting them in control of some of life’s challenging time constraints. The auction venue allows for a typical sale process to be accomplished in 60-90 day period (start to finish) eliminating prolonged carrying costs and stress when properties remain vacant. We pre-qualify budders by establishing larger escrow requirements &/or proof of funds. Deposits placed by successful high bidders are non-refundable assuring that buyers have a vested stake in culminating the sale process. All due diligence is performed by the buyers in advance of the auction so there is no re-negotiating an agreement after inspections are done. Sales contracts have no contingencies so sold means sold! In most instances, real estate commissions are paid by the buyer through the use of a buyer’s premium, so the “hammer price” is all seller proceeds (less normal and customary title work and tax pro-ration). Advertising/marketing costs are advanced by the client but commissions are paid by the buyer translating to a significant savings for our clients.
Thomas Auctions LLC, will develop and implement a customized marketing campaign tailored to maximize awareness and interest in your property. This often involves both print & on-line media outlets, social media, direct mail and perhaps radio & TV. We look at the demographics of the potential buying audience for your property and develop a campaign to cost effectively reach that target audience. Our bidding app allows us to incorporate buyers who have registered in advance but are unable to physically attend the auction, so as to assure that we maximize participation in your event. All aspects of the auction must be thoroughly thought out and planned in advance in order to give buyers the confidence they need to be successful bidders and to prevent potential problems. Our staff of highly trained full-time auction professionals will ensure that every detail, small or large, is handled in a professional manner. We’ll look forward to talking to you personally and assessing your real estate needs to create a solution that works for you!