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For those hoping to buy real property at auction, there are some basic questions that should be asked before participating. A real estate agent in a class asked me this very question the other day, and here are some of the most important questions to ask:
- Who’s conducting the auction? Who is the auctioneer, broker and any other parties representing the seller?
- When, where and what time? Where is the auction taking place? What date and what time?
- What type of auction? With reserve or without reserve? If with reserve, how so? In other words, a published minimum which if met or exceeded, the property sells? Seller confirmation of the high bid? A secret reserve which isn’t published?
- Is the seller, or anyone on the seller’s behalf, authorized to bid during the auction?
- Is clear title guaranteed? If not, what type of title is guaranteed? What liens or encumbrances is the property being sold “subject to?”
- How will the property be deeded? What type of deed will be used?
- What seller disclosures are available for review?
- What amount of deposit is necessary to register? What amount of deposit is necessary from the winning bidder? Must these amounts be cashier’s checks, or can they be personal checks, cash, or other?
- If the seller cannot perform, how soon are any deposits refunded?
- Why is the owner selling the property?
- Is the transaction ultimately subject to court approval?
- Is there a buyer’s premium? If so, how much is it?
- What other costs are charged to the buyer, such as title insurance, document preparation, transfer tax, etc.?
- Are there home owners association and/or condominium fees payable as a new owner?
- Is the property being sold in entirety, or by the piece, and then whole, whichever demands more?
- Is any “multipar” system being used where multiple parcels are grouped in different combinations?
- Is there online bidding, or other ways for persons to bid without being present?
- Can the property sell prior to auction?
- What is required to register to bid?
- Is pre-registration required? If so, how much prior, and what forms are required?
- Are brokers representing buyers compensated? If so, how much?
- Is there a standard contract that is used to memorialize the sale? Is that contract available to preview prior to the auction?
- Can the property be previewed prior to auction?
- Does the purchase contract contain any contingencies, such as contingent upon financing, inspection, etc.?
- Where will the transaction close? Does the transaction close in person (round table), or escrow?
- How soon must the transaction close following the auction?
There are probably other questions to ask as well, but these may be the most important ones to ask.
Bidders may want to see if this same auctioneer/broker is conducting another real estate auction prior to this one which they are interested in, so they can attend and watch the proceedings. In this way, when the real estate auction they are interested in takes place, many of the procedures will likely seem familiar.
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. His Facebook page is: www.facebook.com/mbauctioneer. He is Executive Director of The Ohio Auction School.