Are auctions only for distressed or discounted property?
This is a major misconception about auctions. The fact is auctions are the primary sales method when selling valuable assets such as vintage vehicles, multi-million dollar homes and priceless pieces of art. The competitive bidding of an auction and the bidding of prospective bidders sets the price and market value of an asset. The item will not sell for more than the highest bid and will not sell for less than the high bid. You, the consumer, and other bidders determine the market value of an item when you buy at auction.
What is a Buyer’s Premium?
A buyer’s premium is commonly used in auctions today as a form of payment for the auction company conducting the auction. The buyer’s premium is an advertised percentage of the high bid or flat fee added on to the high bid to determine the total contract price to be paid by the buyer.
I want to go to an auction, what should I know before I bid?
Understand the type of auction you are participating in (absolute, reserve, etc.) and make sure to review the complete terms and conditions of the sale. You will want to arrive early to register for the auction. Certain auctions (i.e. real estate) may require a cashier’s check or other payment in advance of the auction to qualify you to bid in the auction.
If you are attending an auction with a live element, you will want to bid in sync with the chant. You should be listening closely and following the increasing bids. Remember: The number the auctioneer is repeating is where the bid is and what the auctioneer is now accepting.
Am I required to have cash on hand at the auction?
It is important that prospective bidders read all documents regarding the sale prior to auction day. Cash payment is commonly not required at auctions. Auction companies may accept multiple forms of payment: cash, check or credit card. When attending real estate auctions, auction companies may at times require a specific down payment on-site in the form of a cashiers check to qualify as a bidder.
What are the differences between an absolute and reserve auctions?
|Absolute Auction: An “absolute auction” is an auction where the property is sold to the highest bidder. There is not a minimum or reserve price that must be met to complete the auction sale.
Reserve Auction: A “reserve” auction means that a price has been set between the seller and the auctioneer that must be met to complete the sale. Reserves are often used to provide the seller with security that they receive at certain amount of money to meet their sale goal.
Can I inspect the property I’m interested in bidding on before the auction?
We encourage you to view the property before auction day. Due diligence on the part of the bidder is important with auctions. Contact the auction company managing the auction and inquire about times when open houses will take place, as well as any paperwork available on the property. Auctioneers want you to feel comfortable on auction day. Always feel free to call and ask questions.
What does “As Is, Where Is” mean?
One of the most common statements made at auction, “as is, where is,” simply means the property is being sold without warranty and that there are no contingencies based on the status of the asset being sold. It is important that you inspect all auction properties before you bid, both real estate and personal property. Photos may not show all the details or potential faults with the asset and it is your job as a well informed bidder to thoroughly inspect and know what you are bidding on BEFORE the start of the auction. Once you bid and buy an asset at auction, you are the new owner.
What is a minimum bid?
Minimum bids are routinely used at auctions to provide prospective buyers with an initial price range of where bidding will begin. If an auction has a “minimum bid” of $50,000, prospective bidders will know that the auction will start with an opening bid of $50,000 and that the asset will not sell for anything less than $50,000. Often times, auctions are advertised with an “opening bid”, but this should not be confused with a “minimum bid”. An “opening bid” simply means a price where the bidding opens.