With interest rates hovering in a historically attractive range and property in most areas continuing to appreciate at a healthy pace, why are so many auctions being advertised online, in newspapers and magazines?
Auctions have become a convenient, efficient method of moving inventory in a hurry and that includes all types of real estate. The auction, which historically included the image of Snidely Whiplash in a black top hat selling off the farm to the highest bidder, is no longer synonymous with desperation and bankruptcy. The Internet has brought property bidding to the family den, with online companies following giants like Ebay into the real estate auction space.
The growing interest has also fostered traditional builders to blend on-site auctions with online auctions. For example, one of the nation’s most successful homebuilders recently announced its first online bid-sale event. Buyers can take an online virtual tour of the homes, download a brochure and pre-qualify for a loan.
In addition, the traditional auction companies are enjoying some of the energy and popularity of their online cousins, making their sealed-bid offerings and on-onsite gatherings more intriguing. These auctions are also not typically affected by interest rates or economic environments. Corporations, public agencies and institutions routinely liquidate “real estate owned” portfolios to free up cash for other projects.
For example, Snohomish County once used a sealed-bid auction conducted by Realty Marketing Northwest to quickly market five residential development properties zoned for apartments and single-family housing located in Everett, Stanwood, Darrington and Sultan. According to a county spokesperson, the properties simply had been designated as “surplus.”
The county found the auction method is more effective and less expensive than conventional listing and advertising through independent real estate companies – especially when the tracts contain a significant amount of timber.
Timber buyers, definitely a niche group, often appear at known corporate auctions saving the seller valuable holding time. According to Tim Reinertsen, senior vice-president of Realty Marketing Northwest, his company not only represents owners of small recreational and residential properties, but also has clients with large commercial, industrial, ranch and timber parcels – such as Weyerhaeuser and The Nature Conservancy.
Realty Marketing/Northwest, with an office in Issaquah, (1-800-822-4669; http://www.rmnw-auctions.com) is conducting one of its two annual auctions of residential, recreational, investment, income, timber, commercial, farm, dairy and development properties in Washington, Oregon, Idaho and California on November 16. Sealed bids for most of the properties are due November 20. A few properties are being offered with no starting bid or minimum reserve.
Seller financing is typically available on many offerings and outside broker cooperation is invited. Most auction companies will pay agents a commission if the agent brings a client to the auction with a successful bid. It’s best for agents to let the auction companies know in advance if they are bringing a potential buyer to the auction.
Persons interested property auctions should thoroughly inspect the property before making any offer. A small percentage of the inventory consist of “distressed properties” which might bring more problems than benefits. Study all appraisals and don’t let your competitive juices carry you away if the bidding gets moving. Stick to your price.
Here are a few of the different types of bids: Minimum bid: Seller has agreed to accept the highest bid that is equal to or greater than the published minimum bid for each property. Absolute bid: The property is sold to the highest bidder; no minimum bid has been set. Reserve bid: When the bidding equals the amount of a published reserve, the seller is committed to sell to the highest bidder. If the bidding falls short of the published reserve, the seller reserves the right to accept, counter or reject the bid.
Most of the auction sellers will carry financing with a 20-25 percent down payment. As usual, cash talks so keep that in mind when negotiating terms with the seller.
Most auctions ask that participants pre-register and bring certified funds (cashier’s check or money order) for each property they wish to purchase. Before you sign it over, however, make sure you have done your research. It’s easy to get caught up in the excitement of a real estate auction.
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