Types & Formats of Real Estate Auctions

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Single Seller/Multiple Property Auction (Portfolio Sale)
This format allows for an offering at a single location and time, or at regional locations at different times, for a single owner offering multiple properties.

Multiple Seller/ Multiple Property Auction
This format allows multiple sellers to pool their properties, creating a larger auction event. For a seller who has flexibility in terms of time, this format provides an economy of scale, allowing inclusion of smaller properties for attractive advertising contributions and brings together buyers for various properties to the same event in a synergistic way.

Sealed Bid Offerings
This format allows bidders to submit bids on pre-approved contract forms and the seller can accept or reject an offer.>

Sealed Bid Convertible
This format begins with a sealed bid program to identify the market segments and judge the depth of market. At sufficient market depths, the format may be converted to open outcry formats.

Essentially, there are four types of auctions: absolute auction (or auction without reserve); second a minimum bid auction known as a  reserve auction ,third a Subject to  Owner Confirmation Auction (no hard set reserve but subject to confirmation day of sale).Forth is a foreclosure auction. The characteristics of each type of auction are outlined below:

Absolute Auction:

  • Property sells to the highest bidder, regardless of the price.
  • Since sale is guaranteed, buyer excitement and participation are heightened.
  • Generates maximum response from the market place, thereby being the only auction process to ensure attaining TRUE market value.
  • Many sellers, including financial institutions and government agencies, have begun to use this method more frequently since an absolute action offers the best performance results of all.

 Reserve Auction:

  • Auctioneer accepts bids at or above a published minimum price. This minimum price is usually stated in the brochure and advertisements.
  • Reduces risk for seller if the seller wants a set price or will not sell. The sales price must be above a minimum acceptable level.
  • Buyers know they will be able to buy at or above the minimum. The seller may, however, limit interest in the auction to only those buyers willing to pay the minimum bid price, and therefore it must be low enough to act as an inducement rather than a hindrance. It is not only difficult to set this lower figure, but there is a great risk of setting some form of anticipated value by using this figure.
  • With a reserve auction a predetermined reserve price is set by the seller in the sales agreement with the auctioneer,the auctioneer may or may not be disclosed the reserve prior to the auction in his/her sole discretion,when the reserve price has been reached the seller by contract is fully obligated to sell the property at or above the agreed apon reserve price .
  • if minimum bid is not reached, the seller reserves the right to accept or reject the highest bid within a specified time --anywhere from immediately following the auction up to 24 hours after the auction concludes.

Sold Subject To Owner Confirmation:

The Subject To Owner Confirmation format is often used, and benefits are seen by both sellers and buyers.The seller retains the ability to refuse an unsatisfactory bid, but remains open for a meeting of the minds the day of the auction. The seller will make a yes or no decision on the current high bid or may counter offer. The buyer has the opportunity to actable or reject the counter offer. If the buyer accepts  the new open bid, bidding resumes and a sucsefull  high bid is accomplished.

Foreclosure Auction:

  • Mortgagor, through a legal procedure, forces the property to be sold thereby removing all existing deeds of trust on the property. This procedure, among other things, requires the sale to be promoted in the legal notices of the local newspaper several times prior to the sale and also requires the sale to take place within a time frame of several hours on a designated day on the courthouse steps. Although this procedure may resemble an auctioneer's method in some ways, it simply can be a legal maneuver to allow the existing mortgagor to reacquire the title of the property.
  • An auctioneer's marketing strategy usually is much more detailed because the specific property is marketed throughout the community and other market areas. Advertisements, brochures and auction signs are utilized, along with soliciting as many bidders personally as possible. This marketing strategy entices the entire market place to be at the auction site, not on the courthouse steps, at a specific time, not within the time frame of several hours, to competitively bid among each other, attaining the TRUE market value.
  • Any artificial bidding such as a foreclosure by a seller or a mortgagor to protect his/her interest has nothing to do with the TRUE value of the property. Artificial bidding can be a detrimental influence on the bidding of the market place itself, thereby diminishing the odds significantly that the property will sell for TRUE market value. Such practices are not looked upon favorably by the real estate auction industry.



Selling Real Estate

About Selling Real Estate: Articles & Tools for Sellers:

How to Buy Real Estate at an Auction

At real estate auctions the auction house, the firm that conducts auctions, acts as the intermediary between the seller and the buyer. It is not necessary to have a real estate agent represent you at an auction. Real estate offered at auctions is sold “as-is,” meaning in its current condition on the day of the sale--no repairs will be made before it is sold to you. Regardless of a property’s condition, buyers are under obligation to purchase a property won in a bid. Educate yourself by doing research on the property and the auction process before attending one.

Step 1

Obtain a list of the properties to be auctioned ahead of time from the auction house. Buyers have the option to inspect properties up to the day before the auction--the property may not be available for viewing or inspection on auction day itself. Visit each property of interest and examine them thoroughly—the interior, exterior, and surroundings or yard. If you are unfamiliar with evaluating real estate or estimating property repair costs, bring a general contractor with you.

Step 2

Estimate the value of the properties to be offered at auction. In order to know how much to bid on each property, find out the current market value (the price the property is worth today). Real estate agents will charge a nominal fee to provide you with property values.

Step 3

Arrange financing before the auction. A winning bidder is obligated to complete the purchase of a property at auction, whether the bidder has financing lined up or not. Get pre-approved for a loan by a lender to find out how much you can spend at auction. Hard money lenders provide fast, easy financing on investment properties, but charge high financing fees. Bank lenders also finance properties purchased at auction and charge lower finance fees than hard money lenders, but the bank lending process takes longer to arrange.

Step 4

Bring the exact amount of cash needed for the deposit or a cashier’s check. At most auctions, you will be required to make a deposit of $10,000 or 10% of the purchase price—whichever is greater. The auctioneer will require the deposit in certified funds. The deposit is nonrefundable. In many auctions, a buyer’s premium is added to the winning bid. This premium is added to the total purchase price of the property. Arrange for sufficient funds to cover the buyer’s premium as well.

Step 5

Arrive early to the auction. At registration you will be assigned a bidder number to use during bidding. You will need to show photo identification and proof of your current address. A driver’s license or ID card is sufficient. During registration, buyers have the opportunity to ask specific questions regarding the properties to be auctioned. Each buyer must sign documentation stating that he understands and agrees to the auction terms.

Step 6

Bid discreetly and nonchalantly by raising your bidder number calmly. Keep looking at the auctioneer while you are bidding. Avoid looking around to see what other bidders are doing while you bid. If other bidders are aware that you want a particular property badly, it could drive up the price. Decide upfront how much money you are willing to spend. Don’t let the other bidders influence you to bid higher than you had planned.

Step 7

Sign the purchase contract and the bid confirmation form upon winning the bid. Contact your lender and get the funds to purchase the property won at auction. Closing will take place within 30 days of purchasing the auctioned property. Legal title to the property will be transferred from the seller to the buyer at closing.

Broker Price Opinions & Comparable Market Analysis


What’s it worth?  Do you know the value of your home? Not the appraised value.  Not the Estimated Market Value. But the true Market value…The truth is, until your home is sold, the market value is somewhat of an unknown.  

That’s why we offer services like BPO’s (Broker Price Opinions) and CMA’s (Comparable Market Analysis).  Using comparable sales and listings, and making adjustments for various factors, we help you in determining the window of value your property might be worth.  We also have a certified appraiser on staff which gives us access to a multitude of comparables and sales.