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Posts Tagged ‘types of auctions’
The History of Auctions
Auctions are increasingly seen as the best way to sell real estate, due to the benefits they provide for buyers and sellers, but the history of auctions is long and storied, dating back at least to Ancient Greece.
Auctions have likely been conducted from time immemorial, but Greek scribes in 500 B.C. were the first to leave a written record, telling of auctions being the only legal way to sell brides to prospective husbands. Particularly beautiful women were subject to vigorous bidding, and fetched the highest prices, while families of those judged less attractive had to add dowries or other extras to make the sale.
The word “auction” comes from the Latin word, augere, meaning “to increase” or “augment,” and Roman emperor and philosopher Marcus Aurelius was said to use auctions to sell family furniture, and others sold war plunder. Rather than the gavel used today, a spear was thrown down to signal the start of proceedings.
The history of auctions in America dates back to the Pilgrims’ arrival in the 1600s and became a popular way to sell land, crops, furs, livestock, and most notoriously, slaves. Just as today, they were seen as the fastest and most efficient means to convert assets into cash. During the Civil War, colonels regularly auctioned off the spoils of war and surplus, and auctioneers are still often called “colonel.”
Many auction schools started in the early 1900s in the United States, with the Jones’ National School of Auctioneering and Oratory win Davenport, Iowa thought to be the first. After World War II, the number of auctions held increased considerably, due to the ability to move real estate and personal property faster than the private market would allow. There are numerous types of auctions, but the ones commonly used for real estate are absolute auctions, reserve auctions and minimum bid auctions.
During the 1990s, technology was finding its way into the auction business. The online auction house of eBay was launched in 1995 and went on to become an “online leader” in the bidding business. With the increasing use of technology and the Internet, the future promises to be as interesting as the history of auctions. Many auctioneers today offer both live and online auctions to meet the needs of customers who could be anywhere in the world. Technology lets buyers participate in the sale without even being there, but as anyone who has attended an well-run auction will attest, being there is half the fun.
Auctions
You are ready to buy a home! How exciting is that! An auction may be a great way to get your price and reduce the time and red tape of a traditional home purchase. Can you imagine moving into your new home in as little as 30 days. It can happen and we are going to give you a road map on how to do it.
I know your first question. How does an auction work? You have seen auctions on TV or may have even participated in an Ebay auction for smaller items but auctions all work basically the same way. The properties we make available to you are obtained from private sellers, banks or developers and most importantly to you are free and clear to close the day of the auction. That’s how you can close in so little time!
Picture this! You are in a room filled with people and the excitement is like an electric charge throughout the room. The auctioneer calls up the first property to be sold. Everyone is on the edge of their seats waiting to see what is about to happen. It is an absolute bid property which means no matter the final price the property is sold when the gavel goes down. Everyone is in anticipation of what the property will sell for and who walks away as the winning bidder. Only registered bidders with paddles can bid so don’t worry about scratching you ear or blinking – that only happens in the movies. If you want to bid, raise your paddle and the bid assistants in the room will help you through the process, making certain you know the current bid and that the auctioneer has acknowledged your price. But the auction is not over by any means because the auctioneer has not declared the item sold until the gavel goes down and bidding is closed. The auctioneer calls for the final bid, there is a silence in the room, finally the gavel goes down and applause and congratulations fill the room. You are now the proud owner of your new home!!!
Auctions are thrilling! There is anticipation, excitement and reward for the winner bidders. They got a great deal on the home they want and best of all you will know in just a few minutes the home is yours and you will be moving in less than a month.
How exciting is that!!!
How to Bid at Real Estate Auctions
Taking part in an event held by RealEstateAuctions.com is easy. Here’s how to bid at real estate auctions:
Before The Event
- Preview any and all properties of interest on any of the Open House dates that will be held prior to the auction.
- Carefully review the disclosures provided for each property, the terms and conditions, and the sales contract. Be sure you understand all the documentation. Seek the services of an attorney, if appropriate.
- Get a financing commitment from a lender if you will not be paying cash. Waiting to do this crucial step after you purchase could result in denial and loss of earnest money. A lender will be available at the auction event if you have not yet secured a pre-approval, but it is highly recommended you not wait until this point to check. You might not qualify for financing.
- Register on our website as a bidder. We’ll also take registrations at the door on the day of the event, but you’ll save yourself considerable time by registering online. If registering at the door or checking out financing with the on-site lender, be sure to arrive early.
At The Event
Check in at the door with the following:
- Driver’s license, state photo ID or passport
- A cashier’s check in an amount specified (varies per property)
- Personal check to supplement the cashier’s check, if needed
- A pre-approval letter no more than 30 days old from a mortgage broker or lending institution, if you intend to finance your purchase (vs. a cash transaction).
Among the registration items you’ll receive is a numbered card or paddle which you’ll raise at the appropriate time during the auction to indicate your bid.
Getting Started
Taking your seat inside the auction room, you’ll listen to the event facilitator review the legal terms and conditions, along with a basic explanation of how the event will proceed.
The auctioneer will take the podium and kick things off with the first property to be auctioned. A photo and relevant facts will be displayed on large screen. You’ll find the same information on a printed brochure available in advance and at the door. The auctioneer will announce updates on any new additions or deletions that are not part of the printed brochure, so everyone is fully up to date on how to bid.
Each property will be listed in the brochure as “Absolute Auction,” “Minimum Bid Auction” or “Reserve Auction.” The auctioneer will verbally confirm these designations. He then begins the famed auctioneer’s chant, soliciting bids from the crowd. As a bidder, you will raise your numbered card or paddle when you wish to place a bid at the price the auctioneer is calling. Scratching your nose or clearing your throat will not count as a bid.
Depending upon where you are seated in the room, the auctioneer or one of his official assistants standing in the crowd will acknowledge your bid. The auctioneer continues the process, with the price moving ever higher. You can make as many bids as you wish as the process moves along.
If You Win
- Proceed to the designated area to begin paperwork.
- A 5% Buyer’s Premium will be added to your winning bid, making your Total Purchase Price your winning bid plus the Buyer’s Premium.
- Tender the cashier’s check in the amount specified for the subject property. A receipt will be provided.
- Write a personal check, if needed, to make the required down payment on the property, which is typically 5% of the Total Purchase Price.
Properties with a Total Purchase Price of $10,000 or less must be paid for in full on auction day.
Your closing will be scheduled within 45 days of the auction.
Can You Change Your Mind About A Bid?
Yes, as long as you inform one of the official bid assistants while the bidding is still in progress and you have not yet been named a winner of the auction. Mistakes happen, of course, but the auction is serious business and you should be extremely careful about the actions you take during the bidding process. Know exactly what you doing. Do not bid if you are unsure or think you might want to retract.
The Official Bid Assistants
These professionals will be standing among the crowd during bidding. They keep watch over the same section of attendees and are there to help you.
For more information about how to bid at real estate auctions, please don’t hesitate to contact us.
Types of Auctions
Each event held by RealEstateAuctions.com typically features three types of auctions. Each is easy to define, understand and participate in.
Absolute Auction
Highest bid wins, regardless of price. Absolute auctions are usually the most exciting and well-attended of the day. Potential buyers are attracted to absolute auctions because of the possibility of landing a property at a bargain price. Sellers love absolute auctions for the buzz they generate and the competitive bidding that is almost sure to result. The result? Typically a happy meeting ground for both parties.
What a great feeling for a winning buyer to know that he or she outlasted fellow bidders and won a desirable property at a fair price, while the seller has absolute confidence that he or she has received true market value for the property in the purest form possible: direct, head-to-head competition.
Minimum Bid Auction
These auctions begin at a minimum set price established by the seller. The minimum bid is published in the brochure and announced by the auctioneer at the start of bidding for that particular property.
Reserve Auction
This type of auction allows the seller to accept, reject or counter the “winning” bid. Sellers may make this decision before the event ends or they may take up to three days to decide. This gives sellers protection that their properties will not be sold below a level they can live with.
To learn which types of auctions apply to each property, be sure to check them on this website. Printed materials, large-screen displays and announcements at the event will also provide that information. In addition, we’ll have plenty of helpful associates on hand to provide assistance, as needed.
Sellers, be sure to contact us if you’d like more information about which type of auction to choose for your property.