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How Does A Real Estate Auction Work?

Thursday, January 4th, 2018
tips to help you at a high plains auctioneers live auction

Purchasing a house through an auction can be an exciting process and land you a great deal on a new home. The process moves quickly, so before you start bidding, you should know how a real estate auction works. Make sure you and your agent agree and are clear on the process before the day of the sale. Know what your reserve price is going to be and understand what vendor bids are and their legal implications.

Displaying proper documentation

Your agent is required by law to display documentation pertaining to your property at least 30 minutes before the bidding begins. The auctioneer will announce information detailing state legislation that applies to auctions, rules that apply to sales in general, and those about your particular auction. This announcement will also state whether co-owner bids and vendor bids can be used. Legal requirements regarding sales differ from state to state, so you should discuss with your agent which laws will regulate the real estate auction.

Asking for the opening bid

When the real estate auction begins, the auctioneer will ask for an opening bid. He or she will also state how the sale can proceed by setting an amount that all bids must use from there. Bids can continue by $5,000, $2,000, or whichever increment has been determined by you and your agent prior to the opening of bids. Other requests can be made, but it will be the auctioneer’s decision whether or not they are accepted.

What does “on the market” mean?

Once bidding has reached the reserve price, the property is then considered to be “on the market” and can be auctioned to the highest bidder. If the property does not reach the reserve price, the auctioneer can privately ask the seller if it is possible to sell at a lower price. The real estate will be released from the auction if a lower price is not accepted. Once the final bid is in and the seller is satisfied with the amount, it is called out by the auctioneer. They will say “going once, twice, three times,” and then “sold” if no further amounts are called out.

When the money is due

If you have made the winning bid, an immediate deposit will be required. The usual amount of a deposit is 10% of the purchase price. You will be required to pay the balance according to the terms set up by the seller. Terms of the balance are usually set at 30, 60, or 90 days from the auction. If you are the seller, the settlement for the remainder can help you sell the property more easily if you are willing to be flexible. The real estate is officially considered sold once the seller receives the balance of the purchase price.

If you have questions about real estate auctions, contact the experts at High Plains Auctioneers today. We can answer any questions you may have on how to sell a property or how to buy real estate at auction. You can call us at (806) 244-6776 or Contact Us by email for more information. You can also check out our Upcoming Auctions to see what we will have available.