Ruby Hill, north gate, Pleasanton Ca. - 2008
Real Estate Auctions
Real Estate Auctions are an area where a house buyer can buy real estate at discounted prices.
However, you must do your homework beforehand and auctions are much more complicated then what the auction houses would have you believe. Most real estate auctions try to get buyers to bid up the price on the houses ... sometimes bidding up the price to a point more than the house is presently worth!!
In some auctions, the auctioneer can actually make "bids" on the owner’s behalf so that unknowing buyers may pay more for the house.
And, not known to most buyers, the minimum bid that is advertised means nothing at all. The owner/seller has a secret, unpublished, reserve price. If a buyer does not meet what the seller wants as a reserve price, no sale takes place.
Read the fine print on auction booklets!! The TV and newsprint ads are extremely misleading!!
As of mid year 2008 lenders changed the way they priced REO homes at county auctions. Previously, the lenders sold these houses for the amount of the mortgage due plus interest, penalties, late charges, etc. But now, many lenders will sell houses, at auction, for lower prices. This can be a tremendous opportunity for someone to buy a piece of real estate at a wonderful price, however, it is a complicated process, not for the faint of heart.
Please email me at realestate@tomlyons.com to discuss you unique needs and situation.
Real Estate Auction Terminology
Auction
A method of selling real estate in a public forum through open and competitive bidding. Also referred to as: public auction, auction sale or sale.
A method of selling real estate in a public forum through open and competitive bidding. Also referred to as: public auction, auction sale or sale.
Absolute Auction
Auction where the property is sold to the highest qualified bidder with no limiting conditions or amount. The seller may not bid personally or through an agent. This kind of auction is also known as an auction without reserve.
Auction where the property is sold to the highest qualified bidder with no limiting conditions or amount. The seller may not bid personally or through an agent. This kind of auction is also known as an auction without reserve.
Auction With Reserve
Auction in which the seller or his agent reserves the right to accept or decline any and all bids. (Auction subject to seller confirmation.) The high bid is reduced, in effect, to an offer, not a sale. 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. A minimum acceptable bid is not published. The seller predetermines the price and is not obligated to confirm a sale other than an entirely acceptable price. A prospective buyer may not invest the time and expense of due diligence when there is no certainty of buying the property even if he/she is the highest bidder. Most real estate auctions held in Northern California are Reserve Auctions.
Auction in which the seller or his agent reserves the right to accept or decline any and all bids. (Auction subject to seller confirmation.) The high bid is reduced, in effect, to an offer, not a sale. 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. A minimum acceptable bid is not published. The seller predetermines the price and is not obligated to confirm a sale other than an entirely acceptable price. A prospective buyer may not invest the time and expense of due diligence when there is no certainty of buying the property even if he/she is the highest bidder. Most real estate auctions held in Northern California are Reserve Auctions.
"As Is"
Selling the property without warranties as to the condition and/or the fitness of the property for a particular use. Buyers are solely responsible for examining and judging the property for their own protection. Otherwise known as "As Is" and "In its Present Condition." All properties sold at auction are sold in “As is” condition.
Selling the property without warranties as to the condition and/or the fitness of the property for a particular use. Buyers are solely responsible for examining and judging the property for their own protection. Otherwise known as "As Is" and "In its Present Condition." All properties sold at auction are sold in “As is” condition.
When attending a reserve auction bid assistants may place a bid on behalf of the seller who has set the reserve price. So, while you are trying to purchase a property, at auction, for the lowest possible price, the people who are running the auction are bidding up the price of the property in order to get unknowing buyers to bid higher for the property. Read the fine print in your auction brochure before participating in a real estate auction.
Buyer's Premium
An advertised percentage of the high bid or flat fee added to the high bid to determine the total contract price to be paid by the buyer. In most real estate auctions held in Northern California, a buyer’s premium of 5% is added to the winning bid. So the final sales price is the total of the winning bid, plus 5%.
An advertised percentage of the high bid or flat fee added to the high bid to determine the total contract price to be paid by the buyer. In most real estate auctions held in Northern California, a buyer’s premium of 5% is added to the winning bid. So the final sales price is the total of the winning bid, plus 5%.
Catalog or Brochure
A publication advertising and describing the property(ies) available for sale at public auction, often including photographs, property descriptions, and the terms and conditions of the sale. It is extremely important to read all of the fine print in these catalogs before participating in a real estate auction.
A publication advertising and describing the property(ies) available for sale at public auction, often including photographs, property descriptions, and the terms and conditions of the sale. It is extremely important to read all of the fine print in these catalogs before participating in a real estate auction.
Conditions of Sale
The legal terms that govern the conduct of an auction, including acceptable methods of payment, terms, buyer's premiums, possession, reserves and any other limiting factors of an auction. Usually included in published advertisements or announced by the auctioneer prior to the start of the auction.
The legal terms that govern the conduct of an auction, including acceptable methods of payment, terms, buyer's premiums, possession, reserves and any other limiting factors of an auction. Usually included in published advertisements or announced by the auctioneer prior to the start of the auction.
Current Market Value
The highest price in terms of money which a property will bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Current market value on houses, changes on a regular basis, mostly due to the economic laws of supply and demand.
The highest price in terms of money which a property will bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Current market value on houses, changes on a regular basis, mostly due to the economic laws of supply and demand.
Minimum Bid Auction
Auction in which the auctioneer will accept bids at or above a disclosed price. The minimum price, acceptable to the owner is always stated in the brochure and advertisements and is announced at the auctions. Keep in mind that in a reserve auction the minimum opening bid and the sellers reserved price have nothing in common. Plus, the owner’s reserved price is not stated. In a reserve auction if the winning buyer’s bid does not equal, or exceed, the seller’s unpublished reserve price, the property does not sell.
Auction in which the auctioneer will accept bids at or above a disclosed price. The minimum price, acceptable to the owner is always stated in the brochure and advertisements and is announced at the auctions. Keep in mind that in a reserve auction the minimum opening bid and the sellers reserved price have nothing in common. Plus, the owner’s reserved price is not stated. In a reserve auction if the winning buyer’s bid does not equal, or exceed, the seller’s unpublished reserve price, the property does not sell.
For additional information on Real Estate Auctions please click on the links below.
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