Auction Services in Today’s World…

Historically, auctions were widely used during the depression to dispose of real estate which flooded the market, due to bank foreclosures. During that time period, auctions were considered a "last resort" to liquidate distressed properties. Over time, auctions became a very effective means to market many farms and ranches.

Over the years, the entire real estate scene has incurred significant changes due to age demographics in this country, public awareness, via use of the Internet, and other marketing resources widely available to the public. Due to time constraints and many other mitigating factors, it is becoming much more prevalent for high quality properties to sell via auction or for buyers to seek out this marketing venue when searching for real estate. Auctions are an intense, accelerated marketing process, which works well in a modern real estate market that demands quick turn around time for buyers and sellers.

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Auction methods have become the accepted strategy for marketing real estate properties primarily by:

• Bringing motivated buyers together to actively compete.
• Reducing the length of the selling process.
• Being convenient to the seller in that all aspects of the sale are handled by the auction staff.
• Leaving all options open to the seller.
• Reducing contingencies to the guarantee of clear title.
• Establishing a distinct sale date.

Auction Methods…

There are several categories of real estate auctions:

• The property is sold to the highest bidder; regardless of price.
• Since a sale is guaranteed, buyer excitement and participation are heightened.
• Generates maximum response from the marketplace.
• Many sellers, including financial institutions and government agencies, are using these types of auctions more frequently.

Minimum Bid Auction:

• The auctioneer will accept bids at or above a published minimum price, which is stated in the property brochure and advertisements and is announced at the auction.
• The seller bears reduced risk because the sale price must be above a minimum acceptable level.
• Buyers know they will be able to buy at or above the minimum.
• Sale may limit interest in the auction to only those buyers willing to pay the minimum bid price which, therefore, must be low enough to act as an inducement rather than a hindrance.

Reserve Auction (Auction Subject to Confirmation):

• The high bid is reduced, in effect to an offer, not a sale.
• The seller reserves the right to accept or reject the highest bid within a specified time, anywhere from immediately following the auction, up to 72 hours after auction.
• A minimum bid is not published.
• Seller predetermines the price and is not obligated to confirm a sale other than at an entirely acceptable price.

A Sealed Bid Auction:

• A variation of a minimum bid or reserve auction.
• Requires prospective buyers to send in a bid prior to the auction.
• Allows only those bidders to enter into the bidding process at a future date.
• Offers sellers the opportunity to evaluate the bids and the potential buyers prior to the bidding process.