Answers for Buyers At Auctions
Q: How should I prepare to bid at a real estate auction?
A: The primary difference between buying real estate at auction versus buying real estate conventionally is that at auction, you do your property evaluations and inspections, including any lead-based paint inspections, and prepare your financing prior to coming to the auction. If you have done your homework in advance, evaluated what the property is worth to you, and have arranged for the financing, buying real estate at auction will be a fun and streamlined process. By doing your work beforehand, you can bid with confidence. You will know what you are getting for your money, from where you are getting your financing, and when you will close your transaction (generally 30 to 45 days after the auction). By participating in the auction process, you can feel confident that you are getting the property at a fair price because you need only bid one increment over the next highest bidder to win. The fact that all bidders are playing by the same set of rules avoids losing real estate over contingencies or seller concessions-if a contingency or concession is offered to one, it is offered to all.
Q: What do I need to do on auction day?
A: It is advisable that you arrive at the auction site at least 30 minutes prior to the time of the auction. By doing this, you will have plenty of time to look at the property, ask questions, review materials and register with Stanley J. Paine Auctioneers. A real estate auction can be over in a matter of minutes so don't be late! Although there is no obligation to bid at an auction, all prospective buyers must register in order to bid. To register, you will need to provide evidence that you have the earnest money deposit required to bid. A valid driver's license or other acceptable form of identification is also required. The earnest money deposit must be in the form of cash, certified check or bank/cashier's check. Credit cards are not generally accepted. See the Terms and Conditions of each sale to obtain the specifics as to the deposit requirements for the property of your interest.
Q: What are the Terms and Conditions of the sale?
A: The Terms and Conditions govern the sale. They include information such as the required deposit amount, when the sale of the property will close, and other key facts. You should familiarize yourself with these prior to the auction. Summaries of the Terms and Conditions are available within the property listing on our website (www.paineauctioneers.com). You should note that at an auction sale, any announcements made by the auctioneer on the day of sale take precedence over previously published or verbally conveyed terms and conditions. So, be attentive at the sale!
Q: How do I bid at an auction?
A: In order to bid at an auction, you need to attract the auctioneer's attention. You can hold up your bidder card, you can wave, or you can shout out "Yes". Many times there will be a bid assistant circulating among the bidders who can also convey your bid to the auctioneer on your behalf. Conversely, if you want to take yourself out of the bidding, just shake your head no when the auctioneer looks at you, or answer "No". If you are ever unsure whether your bid is the high bid at any given time, feel free to ask a bid assistant or the auctioneer to confirm this. The auctioneer wants to provide you every opportunity to place your bid and will not allow you to bid against yourself. The closing period is in the Purchase Agreement and is generally no later than 30 to 45 days after the auction.
Answers for Sellers At Auctions
Q:What are the advantages of selling real estate at auction?
A: When you sell real estate at auction, you, the seller, dictate the terms of the sale. This is contrasted by traditional brokerage where the buyer dictates the terms. Here are some advantages:
- You sell your property on your time schedule, not the buyer's. Auction marketing of real estate generally requires 4 to 6 weeks. So 4 to 6 weeks after you sign your Auction Listing Agreement, you will have your auction. Closing is then within 30 to 45 days of the auction. What this means to you is that you can plan your future more effectively and confidently and the relatively quick process will reduce your holding costs.
- Real estate auction sales are generally "as-is, where-is". What this means to you is no more "nickel and dimeing" because an inspector found this or that wrong with the house- no more disputes over condition of systems or other issues. The buyer purchases the property as they see it and as it is.
- Real estate auction contracts generally have no financing contingencies. What this means to you is you have far greater certainty of closing on an auction purchase contract than a conventional contract.
- At auction, you sell your property at the highest bid acceptable to you. You do not have to evaluate whether you left money on the table. The auction creates a competitive bidding environment. What this means to you is that you'll have knowledge of what the market is willing to pay for your property, enabling you to make your decision to sell with certainty and confidence. The process of gathering all interested parties in one place at the same time gives you the best opportunity to obtain the highest possible price.
Q: How will my property be marketed?
A: A key advantage of auctioning real estate is the benefits of customized advertising and marketing programs. Auction marketing typically consists of print advertisements, targeted direct mail, fax marketing, e-mail marketing, property signs, and web listings on www.paineauctioneers.com. Stanley J. Paine Auctioneers will produce all advertisements and marketing material, with an eye toward highlighting your property's strongest features. What this means to you is that your property is exposed to the widest possible buyer audience, thereby increasing your possibilities of a successful sale at the highest possible price. In an auction marketing campaign, your property will generally be the ONLY choice in a given category or neighborhood…not one of many listings from which a buyer may choose. In an area where multiple homes or other properties have for sale signs in the yards, the property with the AUCTION sign will garner most of the attention.
Q: What makes a good auction seller?
A: A good auction seller is a seller who is motivated to sell his or her property and is ready, willing and able to accept the highest bid for his or her property. Remember, the goal of a well-executed auction is to provide the highest possible sale price for your property in the shortest possible time period.
Answers for Buyers at Business Assets and Liquidation Sales
Q: What do you suggest about inspecting items?
A: Make time to view items before you buy them, even if only on the morning of the auction. If bidding online, remember that photos may be for representation only. Read descriptions carefully and try to attend the inspection if you are local to the sale. ALWAYS INSPECT BEFORE YOU BUY. Many auctions sell on an as-is, where-is' basis. This means no guarantees. Auction companies do this not because all items are faulty. Rather, they may not have the time or facilities to check everything included in a sale.
Therefore, do not assume `as-is' means `no good'. Look before you buy and occasionally take a chance if uncertain as to quality... you may be pleasantly surprised.
Q: How do I pay for items at an auction of business assets or a liquidation sale?
A: Many auction companies will not take checks and/or credit cards; this means cash or cashiers check only...be prepared! Deposits may be required to obtain a bidder's paddle, or simply upon the award of a bid. Either way, you will most likely be responsible to leave a deposit for your purchases on the day of the auction. Full payment is always required before purchases can be picked-up. Full payment is to be made at the conclusion of the auction, even if you do not intend on picking up your purchases for several days.
Q: How is the auction sale organized?
A: Some sales (typically art, antiques or collectible auctions) take place in a theater style format - bidders sit and bid based on a catalog of items. Other sales (typically business equipment) are conducted using a walk through format - bidders follow the order of the sale throughout the auction facility, walking from lot to lot. As walk through sales can be more exhausting than theater style sales, it's always nice to be prepared.
Q: Do I need to register before bidding?
A: Some companies require you to register upon entering the auction site. Others permit you to inspect before you register. In either case, the registration process will usually require you show some form of identification and may require you to leave a cash refundable deposit. If asked to sign something, make certain you understand the terms of sale before you sign as you will be held to them. Providing a business card may speed up the registration process.
Upon registering, you will be provided with a bidders' number and, often, a sale catalog.
Q: How are items sold in a business asset or liquidation sale?
A: Items will be identified by 'lot' numbers. These numbers indicate the order of the sale, beginning with lot number 1 and continuing in sequential order through the last lot of the auction.
Lots may consist of one or several items. In the event a lot consists of more than one item, be aware at the time of sale whether the lot will be sold 'by the piece' or as one 'lot.' Items sold by the piece usually indicate the piece count on the lot tag or in the catalog. If, for instance, one lot number indicates a quantity of 3 widgets, and the auctioneer says sold at $5.00, this will be charged at 3 times $5.00 or $15.00 total. If, however, the lot tag, the catalog or the auctioneer indicates the lot will be sold 'for one money' or 'as a lot', a $5.00 hammer price will be charged at $5.00 total.
Keep in mind that an auctioneer has the right to change an item, when offered up, to a piece count or a lot at their discretion. A good auctioneer will make clear announcements to ensure the audience is aware of any such changes.
Q: How much assistance should I expect from the auction company on auction day?
A: Auction companies, like any business, vary greatly. Some auction sales have plenty of staff available to answer questions and provide assistance. Some do not. Many auctioneers conduct sales throughout the country, traveling with a small staff. These personnel may be too busy on auction day to answer questions. If you want to leave an auction satisfied, expect as little help from the auction company as possible. If you are unfamiliar with what you are interested in buying, invite a friend or associate to join you at the auction.
Q: Any advice on bidding at a business asset or liquidation auction sale?
A: Know your top price before you begin bidding. Don't, however, be stuck on the notion that you should only buy something if it's dirt-cheap. Auctions can save you money -- sometimes allowing you to buy at 10¢ on the dollar. Often, though, competition doesn't allow such savings.
Therefore, consider what something would cost you if you purchased outside of the auction format. Also consider if you will be able to find the item elsewhere. Then set your price at what you can afford. Remember, if you need something, a 20% savings is a 20% savings. There are many philosophies on how to bid successfully at an auction, but the bottom line is if you are willing to pay more than anyone else, you will win the bid.
The auctioneer may start the bidding by asking for a specific price or may take a bid from the audience. If a bid is requested, you may want to throw out a bid below what you are willing to pay. While you can try bidding any amount, you will only slow down the auction or be ignored if you attempt a ridiculous bid.
Once the bidding is under way, the auctioneer will request incremental increases. These can be accepted with the wave of a hand, by holding up your bidders' number or with a verbal acknowledgment. If, however, you wish to offer an amount lesser than the raise the auctioneer is requesting, you may yell out such a price or make a hand gesture which indicates a half bid (usually done by holding out your hand flat with your palm facing the ground). Keep in mind that the auctioneer may or may not accept a bid less than the increment requested for several reasons. The bidding may be too active or the increment too small (i.e. a $10 raise on an automobile).
Don't be concerned if during active bidding the auctioneer does not see you; remember...it's the last bid that counts. As a matter of fact, you may want to wait until the bidding begins to slow before you get involved. However, don't wait too long or you may loose out. As you attend auctions, you will develop your own strategy. Perhaps you find that shouting out an aggressive bid intimidates your competition, or maybe you find it worth the risk to try and get your bid in 'just under the hammer.'
Q: What does it mean when the auction offers “choice” on items?
A: Occasionally, an auctioneer will offer 'choice' on several lots. This means that several lots will be offered at once -- for instance lot #s 110 through 115. When the auctioneer says sold, the high bidder will have the option to purchase one or more of the lots. The remaining lots may then be offered at the same price to others who participated in the bidding and then to the floor, or the auctioneer may choose to offer the remaining lots, requiring the successful bidder to take all.
When items are offered as choice, keep the following in mind. If you are interested in a single item or a small quantity, don't hold back hoping the balance is offered to the floor. Many times, dealers or retailers will win a choice bid and take the entire quantity. Choice bidding requires end-users to out bid dealers. Considering that dealers usually turn around and sell their purchases for as much as twice what they pay or more, you're by no means paying more than you should.
Q: What do I do if I am the high bidder for an item?
A: When the auctioneer says sold, be certain you hold up your bidder number so that the sale can be properly recorded. Listen to the auctioneer repeat the sale price and your bidder number to be sure it's correct. After you have been awarded the bid, you may be required to pay a deposit to the cashier. If you are done bidding, you may be able to pay and pickup immediately. Some auctions, however, will require items to be picked up during a checkout period which is typically announced before the auction.
Once you are awarded a bid, by law you are obligated to the sale. It is very important that you are aware of this before you bid, as most auctioneers will not let you back out of a purchase. Even if you have not yet left a deposit, an auctioneer can still choose to take you to court over a reneged bid.
Q: If I am the successful bidder, when and how can I pick up the goods I have purchased?
A: You may have a limited time in which to pick-up your purchases. You may also be responsible for carting out your own purchases. While this doesn't apply to real estate, and may not apply to art, antiques and collectibles, this is common at any business closure type of sale. Know these terms before you bid as they may affect how much you're willing to pay, especially if you must hire someone to assist you. If bidding online, remember that the same pickup requirements will likely apply to you. This means making your own arrangements to have your purchases removed with several days of the auction.
Q: What is a buyer's premium?
A: A buyer's premium is a percentage of the high bid that is added to the high bid to establish the total purchase price. For example, if your high bid is $100,000 and that particular auction is using a 10% buyer's premium, the buyer's premium would be $10,000 ($100,000 high bid multiplied by 10%) and the total purchase price would be $110,000. This methodology is common to the auction industry, but is not used in all regions or in all auctions. Refer to the Terms and Conditions of specific sales to see if the buyer's premium is applicable.
Q: What is the difference between an "absolute" auction and a "reserve" auction?
A: An absolute auction means that the property is sold to the highest bidder, regardless of price. A reserve auction, sometimes also referred to as an auction "subject to confirmation," means that the seller reserves the right to confirm the high bid at the conclusion of the sale. Unless explicitly advertised as "absolute" and likewise disclosed in the Terms and Conditions, auctions are "reserve" auctions.
Q: What does it mean when property is sold in "As-Is, Where-Is" condition?
A: This means that you are bidding on the property where it is at the auction and in whatever condition it is in at the auction. There is no representation as to the working condition of property and no warranty or guarantee is provided or implied. Therefore, you need to do your inspections prior to the auction so that you know the condition of the property on which you are bidding. Material defects known to the auctioneer prior to the auction will be disclosed. However, the auctioneer makes no representations, guarantees or warranties as to the property.
Q: What happens if I come across some terminology I do not understand, if I need clarification on Terms and Conditions, or if I have other questions?
A: Just ask us! We want to do everything possible to make buying and selling at auction a comfortable experience that meets your needs and expectations.