Below are some common questions about Auctions.
Q. What is an “ABSOLUTE AUCTION”?
A. An auction without reserve. An auction in which property is sold to the highest bidder regardless of price. This typically generates a much greater interest among potential buyers resulting in greater attendance at the auction, and a higher final sale price for the property being sold.
Q. What does “RESERVE AUCTION” mean?
A. Also referred to as “Auction Subject to Confirmation. An auction in which the seller or his agent reserve the right to accept or decline any and all bids. A minimum acceptable price may or may not be disclosed and the seller reserve the right to accept or decline any bid within a specified time.
Q. What does a “NO RESERVE AUCTION” mean?
A. Also known as an Absolute Auction. An auction in which property is sold to the highest qualified bidder, where no minimum price will limit the bid, where the seller may not withdraw the property from the auction after the first bid has been received and where the seller may not nullify the sale by bidding himself or through an agent. “No Reserve”, “Auction Without Reserve” is the equivalent to the term “Absolute Auction”.
Q. What is an “ABSENTEE BID“?
A. A procedure which allows a bidder to participate in the bidding process without being physically present. A bidder who cannot attend submits an offer prior to the auction. All arrangements to payment have been made in advance.
Q. When it states “AS-IS, WHERE-IS”, what does that mean?
A. 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, Where-Is” and “In its Present Condition”.
Q. What does “BIDDERS CHOICE” mean?
A. A method of sale whereby the successful high bidder wins the right to choose a property or properties from a grouping of similar or like-kind properties. The winning bidder then has the choice to take one property or as many as were offered in that round. After the high bidder’s selection, the property is deleted from the group, and the second round of bidding commences, and so on, until the properties are sold.
Q. What do they mean by a “BUYERS PREMIUM“?
A. A percentage added on to your bid amount to arrive at the total contract price. In Real Estate it is the amount added to the high bid to determine the total contract price to be paid by the buyer. The use of the buyer’s premium benefits both buyers and sellers. Sellers benefit because it helps to defray many of the expenses associated with conducting an auction. The buyer benefits because without the use of this tool, there may be have been auction. The competitive bidding process might not exist if the buyer’s premium were not used to offset some of the expenses. Check the terms and conditions of the auction to determine if there is a buyer’s premium.
Q. What is “BROKER PARTICIPATION”?
A. (Also known as Broker Cooperation) An arrangement for third-party brokers to register a prospective buyer with the auction company. The broker is paid commission by the owner of the property or the auction firm only if his prospect is the high bidder and successfully closes on the property.
Q. What is “DUE DILIGENCE”?
A. The process of gathering information about the condition and legal status of the property to be sold.
Q. What is a “MULTI-PARCEL AUCTION”?
A. A process used in real estate auctions where a bidder has the opportunity to combine several parcels of land preciously selected by other bidders, thereby creating one larger parcel out of several smaller parcels. This process is often used in conjunction with bidder’s choice.
Q. What does a “PROPERTY INFORMATION PACKAGE” contain?
A. (PIP) A package of information and instructions provided by the auction company pertaining to the property to be sold such as a contract, legal description, survey, terms and conditions and disclosure statements.
Q. Why must I complete “REGISTRATION” before an auction?
A. The process you must complete in order to become a qualified bidder, When you first arrive on auction day, you should ask to register and obtain a bid card with your bidders number on it. You will be asked to show proper identification to register. You may be required to verify that you have verified funds or cash in you possession. You must register at each auction event. This is required before bidding.
Q. What are the “TERMS & CONDITIONS” of an auction?
A. The legal terms that govern the rules for a specific auction. Each auctions terms & Conditions may vary and the bidder must understand them before participating in an auction. They include method of payment, buyer’s premiums, possession, reserve and other limiting factors. Usually included in published advertisements or announced by the auctioneer prior to the start of the auction.