A Guide to Buying and Selling Real Estate at an Oral Auction

Why Property Owners Like To Sell At Auction

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Sellers include all those who also sell properties through conventional brokerage firms… builders, developers, trusts, institutions, non-profit organizations, governmental entities, lending institutions, investors…and the list goes on and on. The properties we offer at auction are no different than those available through other sales channels.

Contrary to a widely held misconception, very little of the property sold at Auction is "distressed" or under a forced sale. In most cases, auction sales are a matter of sound business economics.

If sellers can dispose of inventory in a single day, after a concentrated marketing period of no more than three and one-half to six weeks, enormous amounts of money can be saved in carrying costs, insurance, taxes and maintenance expense. Such savings can easily amount to more than ten percent of the value of the real estate in a single year. Sellers are more than happy to pass such savings on to buyers because they wind up with the same profit, and can put more money back to work that much more quickly.

Sometimes, an owner simply cannot determine what a property is worth. An auction, with people bidding openly against each other, is the surest possible way of establishing true market values.

Finally, an auction marketing program usually reaches a great many more potential buyers than other sales programs, so the probability of selling all the properties available is greatly increased.

Buying Real Estate At Auction

Learning About Auctions

Since auction marketing programs are time sensitive and concentrated, they usually last no more than four to six weeks. In addition to ads in local and regional newspapers, radio and television are often used to announce auctions.

Here at Realty Marketing/Northwest we also maintain a mailing list of those who have asked to be notified of upcoming auctions.

All auction ads contain a phone number you can call to obtain an auction catalog. Our staff makes certain that the catalog is in the mail the same day you request it.

Getting To Know The Property

Realty Marketing/Northwest goes to great lengths to provide you with al the information necessary to make an intelligent buying decision. The Auction Catalog contains descriptions and photos of the properties, site and unit plans and location maps. Terms and conditions of the auction sale are provided in detail, including financing, hours for inspection, deposits required and closing procedures.

Another important feature of Realty Marketing/Northwest catalogs is the Table of Properties* , which not only lists and briefly identifies each property, but also tells you what the Minimum Bid or Published Reserve is for each property.

The Minimum Bid and the Published Reserve are extremely important to you, because they are the figures at which the seller is committed to sell the property at the auction.

A Minimum Bid is the lowest bid the auctioneer will accept for a property. Once that bid is made, the property will sell to the high bidder.

A Published Reserve is the minimum amount for which the seller must sell a property on Auction Day, but the bidding can start anywhere the bidders choose. If the bidding does not reach the Published Reserve, then the seller can accept, reject or counter the highest bid.

The seller's obligation to honor a Minimum Bid or Published Reserve Price applies only to the Auction. Before or after the auction, sellers are under no such obligation.

Property Inspection

If you plan to attend an auction, it is imperative that you inspect the property before the sale. Not only should you make a thorough physical inspection, you should also review all of the pertinent documentation available at the Auction Information Office.

Most auction properties are sold "as is, where is". Under the terms, it is the buyer's duty to inspect the property and the supporting documentation to satisfy himself or herself as to its conditions and circumstances. While the sellers and the auctioneer will do everything they reasonably can to make all information available, in the final analysis, it is the buyer's responsibility to know what property is being purchased, and under what terms and conditions. The purchase agreement you sign Auction Day is a binding contract.

Physical inspections can also help make you a smarter bidder at the Auction. Once you have all the facts, and know the property, you can form your own opinion of the property's value. No one can force you to bid more than that figure on Auction Day. Another advantage to familiarity which careful inspection provides is that you can make more than one choice of properties. Then, if you are out-bid on your first choice, you may have other acceptable choices on which to bid.

Registration

You must be registered to be eligible to bid on Auction Day. To do this, complete the registration form that comes with the Auction Catalog, or which is available at the Auction.

For Realty Marketing/Northwest Auctions, we encourage registration before Auction Day, so that your bidder package will be ready for you to pick up when you arrive on Auction Day.

Registration is primarily to protect you, the bidders. It permits the auction house to screen prospective bidders' ability to purchase the properties up for sale, thus keeping unqualified bidders from entering the bidding.

Don't worry... you can't really buy property at auction by scratching your head or waving to a friend!

On Auction Day, you will receive a bidders package which includes a numbered bidding card which is your authority to bid.

When you wish to bid, simply raise your card, and the Auctioneer or one of the floor assistants will take note of it.

You should have no trouble following the bidding at the Auction. Of the thousands of bidders who have attended Realty Marketing/Northwest Auctions, the great majority are doing so for the very first time. We know this, and we also know how important these purchases are to most of our clients. Our Auctioneer will always match the pace at which he calls the bids to the bidding activity. If you cannot understand a bid, or need more time to consider your next bid, notify one of the auctioneer's floor assistants. The Auctioneer is always willing to interrupt the Auction to permit bidders a reasonable amount of additional time for clarification or consideration.

Absentee Bidding

If you cannot attend the Auction, but would like to bid on a property, you have two alternatives:

1. You can obtain a Mail Bid Form, and send it, along with certified funds for the percentage of the purchase price required to open escrow in the event that your bid is successful. If yours is not the high bid, your funds are returned to you by mail within three working days after the Auction. One of Realty Marketing/Northwest's staff will bid on your behalf up to the amount of the written bid you submit. Your bid will only be advanced in increments called for by the Auctioneer. (For example, if you submit a mail bid of $60,000 on a property with a Minimum Bid of $50,000, and the Auctioneer calls for $1,000 bid advances, if your only competing bidders stop bidding at $55,000, we will bid in the property for you at $56,000.)
2. You can have someone- a friend, business associate or attorney, for instance- bid for you, provided that the person has a notarized power of attorney from you in his or her possession.

If You Are A Successful Bidder

The first thing that will happen after you are the winning bidder is that a buyer escort will ask you to sign a "Bid Confirmation" form, which has your bidder number and the amount of your successful bid entered on it.

You will then be taken to the Escrow Room, where you will sign a binding agreement to purchase, make your earnest money deposit and begin loan processing.

If you have indicated an intention to bid on more than one property, and have presented the necessary certified funds for each property you intend to bid on, your bidder card will be marked to identify you as a "Multiple Bidder", and you will not be expected to leave the auction until you indicate that you are through bidding.

Buying A Property After The Auction

You will find in your Bidder Package a "Back-Up Buyer" card. If you would like to be notified in the event that a property in which you are interested becomes available after the auction, fill out the card as indicated and leave it with a member of the Auction staff.

In residential property auctions, our experience has been that all properties sell on Auction Day. Occasionally, a successful bidder will fail to qualify for a loan, or not complete all of the required conditions of the escrow. Back-up buyers are contacted before the property is made available to anyone else. In most cases, properties are offered at or above the high bid made on Auction Day.

For Your Protection

Finally, remember that the auctioning of real estate is as closely regulated by the state and local authorities as any other form of real estate transaction. No reputable auction house will permit false bidding to increase bids, and we will vigorously prosecute any bidders who collude between themselves to constrain free and open bidding at Auction. In either case, a crime has been committed and the offenders are liable for prosecution and fines or prison terms.

In Summary

1. If an auction is advertised, and you are interested in the properties offered, call for the Auction Catalog.
2. Study the catalog carefully.
3. Inspect the property documentation available through the Auction Information Office.
4. Don't be afraid to ask questions. Until Auction Day, the Information Office staff can't sell you anything! They are there to answer your questions, and they welcome them.
5. Pre-register if you plan to attend the Auction.
6. Decide on the top amount you are willing to bid on any property before the Auction starts.
7. If the properties being offered are similar, choose one or two back-up units in case you are out-bid on your first preference.
8. Enjoy the bidding. An auction is the fairest, most open real estate marketplace in the world.
9. Remember…it's a win-win situation. Winning bidders get a bargain, and the sellers have saved on holding costs!

To learn more about how Realty Marketing/Northwest can serve your real estate needs-as a Buyer or Seller- call the Auction Information Office at 800 845-3524.

Realty Marketing/Northwest
P.O. Box 6465
Portland, OR. 97228

Copyright © 2005 Realty Marketing/Northwest. All rights reserved. No part of this material may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying and recording, or by any information storage and retrieval system, without permission in writing from Realty Marketing/ Northwest.