Property Auctions

The properties will sell for less than if the properties were listed with a realtor because the buyer is paying a 10% buyers fee over the sales price to the auctioneer (twice the standard commission.) Didn't find info if the seller also pays commission but assuming they don't so they can sell for at least 5% because the buyer is paying the commission and then some.

Cork-
In some respects you may be right. However, by utilizing the auction method of marketing we can predict when the property will sell & close. If the seller considers current market conditions, they can then estimate the dollars that will be available to re-invest upon closing. Our sellers consistently report to us that, considering the time-value of money, the predictablility of the sale date & value acheived significantly exceeds the "perceived loss" of that extra 4-5%. How long would you want your money to sit idle?


I will be surprised if the sellers take significantly less than they were prepared to take minus the 5% commission. If they get 5% less, the seller pays 10% more. The seller gets the same and the buyer just paid 5% more.

Not necesarily. See above, and other posts.
From their website:

"Within all of us is a tremendous need to win. All interested parties are "forced" to make a decision. Excitement and motivation are used to the fullest with a public auction. Professionally trained ringmen apply continuous motivational pressure to the buyers to gain every dollar possible. This sense of excitement works to create the psychology of impending sale." :nono1:

Cork-
Like you, I represent the seller. Our fiduciary responsibility is to the seller. By the same token, we must always treat our buyers with respect, otherwise we have no buyers for future sales. Our buyers will only pay what they are willing to pay. When was the last time you told a buyer they were paying too much for your seller's property? If the seller and buyer both agree to a dollar value by virtue of the bidding process, then everyone wins.

A ringman's job is to ensure that the buyer and seller both understand the process and the interest in achieving mutual goals.

Might as well throw in the liquor. Is there any difference?

Huh???

The standard FAR contract has a clause which allows the buyer to get out of the contract if the appraisal doesn't come in as high as the contract price.

Cork-
We provide notice well in advance of the sale, and property information packets are available upon request.

In our experience, astute buyers are not interested in "our" appraisals. They are free to order their own before the auction, or after. The same applies to mechanical inspections (See below). We will make the property available on request. Astute buyers will know the market and consequently will apply their own value to the property. The only appraisal that is worth anything is the one that someone is willing to write a check for. Please bid accordingly.


How bout the right to inspect? In a standard contract, the buyer has the right to have an inspection by a professional and the seller generally pays up to 1.5% in waranteed repairs and 1.5% for wood destroying organism damage.

I'm sure that you are aware that there are actually two FAR/BAR contracts. One is with right of inspection/cancelation, and the other is "As Is". As indicated above, prospective buyers may visit/inspect the property upon request, and do so with or without the professional of their choice. We are selling "AS IS". Please bid accordingly.


Of course no financing contingency if it's a cash deal.

Correct. Your bid packet should provided enough information for you to pre-qualify with the lender of your choice. Please bid accordingly.



How bout seller's DOC stamps and title insurance? On $500k, sellers doc stamps are about $3500, buyer's doc stamps are about $1700 and seller's title policy is about $2550. Who pays that?

A copy of the Purchase & Sale Agreement, including these terms, is included in the bidder's property information package. This information will also be covered in opening remarks on sale day. Please bid accordingly.

It will probably sell for quite a bit less if buyer pay 10% buyers fee plus all closing costs.

No different than any other deal. Please bid accordingly..

Would also be nice to know comparables - sold prices not list prices.

Buyers typically research their own comps. We prefer this as there is never a question of legitimacy.

Does the buyer get a chance to review the contract prior to purchase?
If anyone knows these answers, please share.

Yes, as noted above, it is included in the bid packet.

Once the property is listed in the auction the buyer has several weeks to look at the property and have it inspected if they wish to do so, however there is no contingency associated with this. Please bid accordingly.

The buyer pays a 10% buyers premium on the bid price to create the contract and/or sales price. Seller provides deed and orders title insurance. Buyer would purchase that insurance and pay doc stamps on the deed. Close in 30 days. I hope I have answered the question.

I am checking with our I.T. department about this issue.

I have beeen hearing that some auctions are experiencing low turnouts and in some instances not one bid even reaches the reserve minium so nothing sells.

Dear Ecopal,

This could be attributed to marketing capabilities of the respective auction company, desireability of the property, local market conditions, overall economic conditions, as well as many other things.

Above all else, the seller has to understand the what the market will bear (supply & demand), and the buyer has to know that the seller is motivated.

Regards,

To all,

Thank you for your questions & concerns. Due to my schedule over the next three days I may not be able to keep up with this forum and may answer questions from multiple members in one response. I will try to respond to all posts twice daily thru Friday morning, but if you don't hear from me please contact us at Higgenbotham Auctioneers. Our number is (800) 257-4161.

or
http://www.higgenbotham.com

BTW, You can only register to download bid packets on our website. it is not a place to register to bid.

We look forward to seeing you all at the auction.

Signed,

A "Professional Ringman"

BTW,

To all R/E brokers & salespeople:

We pay (from our commission) participating brokers/salespeople who are registered by their buyers in advance of the auction.

If you believe you have an interested party please call our office, ask for Karen, and let her know you need a BP form for the North Florida sale. She'll provided details and fax it to you right away.

Karen Jones
(800) 257-4161
8:30-5:30 EST

Actually, auctions are quite common these days. We've had them here for years. Now if you see a list of foreclosures in the area - let us know ( absolutely:roll: ).

Amp,

You're absolutely right! In 2005 Higgenbotham sold right at $100 Million worth of real estate at auction throughout the U.S.

None were due to foreclosure.
None were due to bancruptcy or distress.

The auction process is merely another method of marketing.

Cork-
Like you, I represent the seller. Our fiduciary responsibility is to the seller.

Sounds like dangerous legal grounds on your part to say this, unless of course, you are acting as a Single Agency, where the Broker is the fiduciary. You should not assume that Cork works as a Single Agency Brokerage, because most agents in this area are not Single Agents, but Transaction Agencies.

By the same token, we must always treat our buyers with respect, otherwise we have no buyers for future sales. Our buyers will only pay what they are willing to pay. When was the last time you told a buyer they were paying too much for your seller's property?...

You cannot lawfully tell a buyer that unless you are working as a Single Agent, and then you can say it and should if it is true, if you have their best interest in mind as required by the Realtor's Code of Ethics.

We are selling "AS IS". Please bid accordingly.

You mention that the buyer has the right to inspect the property after the purchase, but if the contract is "as-is," that leaves the buyer in a bind if it is not to his or her liking. Is this correct?

Sold!!!

Sounds like dangerous legal grounds on your part to say this, unless of course, you are acting as a Single Agency, where the Broker is the fiduciary. You should not assume that Cork works as a Single Agency Brokerage, because most agents in this area are not Single Agents, but Transaction Agencies.


You cannot lawfully tell a buyer that unless you are working as a Single Agent, and then you can say it and should if it is true, if you have their best interest in mind as required by the Realtor's Code of Ethics.



You mention that the buyer has the right to inspect the property after the purchase, but if the contract is "as-is," that leaves the buyer in a bind if it is not to his or her liking. Is this correct?

Joe,

I'm smiling, too. I stand by all earlier responses. Please re-read each question by Cork in the context which it was intended, and my reply to same.

The auction process is fair, open to all, and works well. Conventional brokers can reap the benefits, and are certainly invited to participate.

It is not my intention enter a debate forum, but only to answer legitimate questions about these properties and the auction process. We look forward to seeing each of you there on Saturday. Remember, you only pay one bid more than the last guy.

I just remembered, auctions are not required to provide the Agency Disclosure to a customer. Please bid accordingly. ;-)

There is nothing wrong with an auction, if the buyer is very informed of the contract and the property, and he or she knows there is no out to the sale.

In the ECAR (emerald coast assoc. of relators) listings, for the last six months, there are two condos which show as sold in auctions in SoWal. Either the properties are not moving, or the Auction people are not properly recording them with ECAR.

If they are not selling, I read a bit of fluff. ;-)

FWIW,

The five houses being sold at auction on Saturday will be open one more time for preview from 9:30am-10:30am Saturday morning. The auction will be held at 11:00am Saturday March 4 at Cafe 30A.

This auction was actually put together by Jim Phillips and Michael Harbin of 30A Realty and 30A Auction Services. You are probably aware that they are both SoWal real estate agents. You may not have been aware that they are also quite familiar with the auction process.

You are welcome to call Michael or Jim at the following numbers. They'll be glad to answer your questions and/or show you the properties between now and sale time. You may also call me or Laura Whitt at the 800-number below if you have any questions specifically related to the auction process.

Jim Phillips' Cell 850-276-1316
Michael Harbin's Cell 334-233-2362

We look forward to seeing you at the auction!

Regards,

Scott Oglesby
Higgenbotham Auctioneers
Lakeland, FL
(800) 257-4161

Well, I think the auction is a good thing. I will be there. I think the market will heat back up and the people who are buying up the property now that can hold on to it will be glad they did when the market heats up. I just think the negative comments about the auction are worried realtors. There are always good deals to be made at auctions. The people selling their properties know they have to come down off the ridiculous prices that most people are trying to get for properties that have been for sale for a year. When the prices go down there is a deal to be made.... I will be there and maybe a year from now I can flip the property I bought for a deal at auction to the negative onlookers for my profit. :clap_1:

There is no reason for an auction of this type to worry realtors. Realtors can register their buyers and get a little piece of the pie if their buyer wins at the auction. It is just another way for realtors to make some money. I think some people are intimidated by those who think out of the box...

You are right. I was just referring to the realtors that were negative about the auction. I agree they can bring people to the table and get a piece of the pie. That is why it is such a great idea everyone wins the seller sells their property and the people helping get their share.

A little bit of something is better than nothing at all.

Boy, what a thread this started. Thanks Joe, was tied up yesterday.

Cork-
Like you, I represent the seller. Our fiduciary responsibility is to the seller.

As Joe mentioned, our fiduciary responsibility may vary depending on the representation that the buyer or seller chooses. We may exclusively represent one client and if that client wants to buy something that we have listed, there's a vehicle to transition to transaction brokerage.

Our buyers will only pay what they are willing to pay. When was the last time you told a buyer they were paying too much for your seller's property?...

I have serious ethical concerns with pressuring anybody into anything as your website notes and I simply don't do it. I also have problems with lack of disclosure. I don't need to tell a buyer that they are paying too much for my listed properties because I perform a market analysis and recommend what they should ask. If they don't listen and refuse to price their property to sell, I simply don't list it.

Lastly,we still don't have an answer on the appraisal issue. Suppose the house doesn't appraise for what was paid? Any contingency? If not then the buyer could lose their deposit through no fault of their own if they don't have the additional difference between the sold price and the appraised price which the lender will base the loan on. I would feel awful in a situation like that.

Regarding co-broke commissions, I have considered registering clients and that's what spurred my questions to you. I wanted to advise them of the risks and costs before doing so and it wasn't disclosed on your website. I have to say that I am happy to learn of the reality of auction purchases before my client was in that frenzied environment that you create. This entire thread caused me great concern and I would have to tell my buyers that they are paying all closing costs plus an additional 10% plus the appraisal and inspection risks. Who gives access when a buyer wants to have a professional inspection? Is it on lockbox?

There is nothing wrong with an auction, if the buyer is very informed of the contract and the property, and he or she knows there is no out to the sale.
Ditto! :clap_1:

I think some people are intimidated by those who think out of the box...

Believe me, there's nobody that thinks out of the box more than me. so that's not the case. As you mentioned, there is probably more commission if we bring our client to this auction than in a standard deal so our motives are merely to put everything on the table. Not just the fluff. A true buyer would be happy to know that they need to add up to 13% in closing costs and auctions fees which is significant. ie: If you win the bid at 600K, you need to add about $67,800 to you winning price. Any real potential buyer will take this info and consider it when bidding. If they don't, they would be a fool. They would also want to know about the appraisal and inspection issues. If that home goes for 100K below comps, then it might be a good deal if it appraises and has no structural or termite issues.

I noticed that TN2FLA registered on the board about a month ago and that baby blue registered in the last day. I can't help but wonder if you have an interest in the sale?

Thanks for your understanding that we are trying to do what's best for our buyers and the So Wal market in general. Keep in mind, that a $600K home sale price where the buyer is actually paying $667,800, will be recorded as a $600K sale. That brings down the comps and the value of our homes. It should be recorded as $667,800 but it isn't because the extra $67,800 is hidden in costs

If you think about it Cork you are not paying more to close! I don't know if you are familiar with this particular auction process. The properties will be reduced significantly from the original prices they were listed on the market for. So the buyer will still come out nicely. An auction is not to trick buyers or pressure them if that were the case they would not be around. I think you may need to contact the companies to ask these questions or concerns you may have before saying something that may not be true to this particular auction.

I have to wonder Cork, Do you work for a seller or BUYER?

Boy, what a thread this started. Thanks Joe, was tied up yesterday.

***No kidding! <<G>>
***Everyone, please forgive me for not being savvy enough with this to properly change the colors of my text. I'm not too bright so I'll use the asterisks to separate my text. Either way, here we go...


***
***Cork-
I mentioned earlier that I didn't want to get into a debate, but here I am. I am leaving early tomorrow morning and probably won't be able to carry this any further tonight or tomorrow. If you would like to help any of your clients please see me at Cafe 30-A about 10:00 Saturday morning. My name is Scott O., and I'll be easy to find. You may also reach me on my cell at (863) 581-9306. I'm here to help you understand the auction process.


Cork-
Like you, I represent the seller. Our fiduciary responsibility is to the seller.

As Joe mentioned, our fiduciary responsibility may vary depending on the representation that the buyer or seller chooses. We may exclusively represent one client and if that client wants to buy something that we have listed, there's a vehicle to transition to transaction brokerage.


***Understand and agreed.-(Highbidder)


Our buyers will only pay what they are willing to pay. When was the last time you told a buyer they were paying too much for your seller's property?...

I have serious ethical concerns with pressuring anybody into anything as your website notes and I simply don't do it. I also have problems with lack of disclosure. I don't need to tell a buyer that they are paying too much for my listed properties because I perform a market analysis and recommend what they should ask. If they don't listen and refuse to price their property to sell, I simply don't list it.


***A broker's opinion of value is merely that. How many listings are currently sitting idle in your area? Higgenbotham is only interested in representing the property accurately. The buyers are not dumb. By virtue of their bidding they will tell us what the values are.

***Value is a matter of desirability tempered by supply & demand.-(Highbidder)


Lastly,we still don't have an answer on the appraisal issue. Suppose the house doesn't appraise for what was paid? Any contingency? If not then the buyer could lose their deposit through no fault of their own if they don't have the additional difference between the sold price and the appraised price which the lender will base the loan on. I would feel awful in a situation like that.


***We consistently show market values at our auctions. I cannot remember a property failing to close because someone paid too much. Conversely, I can tell you that some very desirable properties have sold well above original asking price and area comps. Again, Supply and Demand. Again, see my earlier posts. You could always have an appraisal done prior to the auction. Bid Accordingly.-(Highbidder)


Regarding co-broke commissions, I have considered registering clients and that's what spurred my questions to you. I wanted to advise them of the risks and costs before doing so and it wasn't disclosed on your website. I have to say that I am happy to learn of the reality of auction purchases before my client was in that frenzied environment that you create. This entire thread caused me great concern and I would have to tell my buyers that they are paying all closing costs plus an additional 10% plus the appraisal and inspection risks. Who gives access when a buyer wants to have a professional inspection? Is it on lockbox?



***There is no inspection risk. Anyone may bring the professional of their choice to inspect any property at their convenience. A 30-A Auction Services representative will gladly provide open, unfettered access. With respect to "frenzied", the auction process is, by nature, exciting and energetic. We don't put guns to anybody's head though. If you want in, just raise your hand and bid accordingly.-(Highbidder)



There is nothing wrong with an auction, if the buyer is very informed of the contract and the property, and he or she knows there is no out to the sale.
Ditto! :clap_1:


***We agree! Twice! Higgenbotham Bid Packets are very comprehensive. It is the buyer's responsibility to confirm, but we work hard to provide only the most accurate and up-to-date information.-(Highbidder)



I think some people are intimidated by those who think out of the box...

Believe me, there's nobody that thinks out of the box more than me. so that's not the case. As you mentioned, there is probably more commission if we bring our client to this auction than in a standard deal so our motives are merely to put everything on the table. Not just the fluff. A true buyer would be happy to know that they need to add up to 13% in closing costs and auctions fees which is significant. ie: If you win the bid at 600K, you need to add about $67,800 to you winning price. Any real potential buyer will take this info and consider it when bidding. If they don't, they would be a fool. They would also want to know about the appraisal and inspection issues. If that home goes for 100K below comps, then it might be a good deal if it appraises and has no structural or termite issues.



***Only $60,000 would be added. Just like with your type of deal, the docs stamps have nothing to do with sale price. Can't inflate that one.


I noticed that TN2FLA registered on the board about a month ago and that baby blue registered in the last day. I can't help but wonder if you have an interest in the sale?


***Not that I know of. No idea who that person might be.


Thanks for your understanding that we are trying to do what's best for our buyers and the So Wal market in general. Keep in mind, that a $600K home sale price where the buyer is actually paying $667,800, will be recorded as a $600K sale. That brings down the comps and the value of our homes. It should be recorded as $667,800 but it isn't because the extra $67,800 is hidden in costs

***You are absolutely wrong here. Read my earlier posts! The bid price plus the 10% buyer's premium is added to create the sales and/or contract price.

i.e.-
Bid Price-$600,000.00
Buyer's Premium-$60,000.00
Contract price-$660,000.00

***$660,000.00 is recorded in the county record. As with any other deal, the docs are not recorded as part of the "costs". No "loss" of value!


***You folks have a great day. I hope to see you all at the auction. Please ask Higgenbotham Representatives anything you would like. Education is the key. The auction process is open, fair, and available to anyone. There is no Hocus-Pocus here.

Scott O...

***You are absolutely wrong here. Read my earlier posts! The bid price plus the 10% buyer's premium is added to create the sales and/or contract price.

i.e.-
Bid Price-$600,000.00
Buyer's Premium-$60,000.00
Contract price-$660,000.00

***$660,000.00 is recorded in the county record. As with any other deal, the docs are not recorded as part of the "costs". No "loss" of value!


***You folks have a great day. I hope to see you all at the auction. Please ask Higgenbotham Representatives anything you would like. Education is the key. The auction process is open, fair, and available to anyone. There is no Hocus-Pocus here.

Scott O...

Scott,

Thanks for the clarification. So sounds like as long as bidder adds 10% plus closing costs (sellers doc's and title insurance) to bid price and they have no problem with appraisal, repair/as is issues, that it won't affect our values. Assuming from your language that it's only recorded in county records, not MLS? Will you be posting the sales on the board? I'm sure everyone is interested. Have a client who isn't going to register but stopping by to check it out. If they sell below listed comps with all expenses considered and full disclosure, we'll applaud the process and bring our buyers to your next one. :clap_1:

If you think about it Cork you are not paying more to close! I don't know if you are familiar with this particular auction process. The properties will be reduced significantly from the original prices they were listed on the market for. So the buyer will still come out nicely. An auction is not to trick buyers or pressure them if that were the case they would not be around. I think you may need to contact the companies to ask these questions or concerns you may have before saying something that may not be true to this particular auction.

Hi Blue, I must admit that I'm not familiar with this particular auction's process. That's truly why I asked. You didn't say whether one of them are yours but I would guess the beautiful gulf front lot is yours and I agree that the lots will be significant (at least 8%), putting that lot at $2,240,000 which would be the same as what it's listed at but the buyer will pay approx. 13% above the sold price which means to get it at the current full listed price, they'd have to get it at $2,118,450 and that would have been the same (approximately) if they gave full price. Since many homes sell for 98% of asking, if I were buying it at auction, I personally wouldn't pay more than $2,076,081 which would be about the same as contract negotiation situation.

To answer you question, I represent both buyers and sellers depending on their wishes. When I act as a transaction broker, I try to establish a win-win situation for both the buyer and seller.

I was just referring to the realtors that were negative about the auction. I agree they can bring people to the table and get a piece of the pie.That is why it is such a great idea everyone wins the seller sells their property and the people helping get their share. I will be there and maybe a year from now I can flip the property I bought for a deal at auction to the negative onlookers for my profit.

If I'm representing a buyer, then I want to make sure they win as well.
I have discussed the possibility of using an auctioneer with one of my sellers who I have sole representation with, so don't get me wrong, I'm not against them. I have learned a wealth of info in this thread and it was my understanding that I was directing my questions to the company that's conducting the auction because they posted it here and represented themselves as a "professional ringman". If you're the owner of that wonderful lot, I truly wish you luck and if you get your price, my seller and I will be looking at the process closely as an option. Good Luck at the auction and keep us posted.

Scott,

Thanks for the clarification. So sounds like as long as bidder adds 10% plus closing costs (sellers doc's and title insurance) to bid price and they have no problem with appraisal, repair/as is issues, that it won't affect our values. Assuming from your language that it's only recorded in county records, not MLS? Will you be posting the sales on the board? I'm sure everyone is interested. Have a client who isn't going to register but stopping by to check it out. If they sell below listed comps with all expenses considered and full disclosure, we'll applaud the process and bring our buyers to your next one. :clap_1:

Cork,
Thanks for the questions you've presented in the last day or so. Sometimes we don't truly realize what people "don't" understand unless they really challenge us to explain ourselves. You have a good understanding now of what we do, & how. Saturday will be fun.

With regard to values, at this point I won't even hazard a guess as to where they end up compared to comps & asking prices. There seems to be an awful lot of property on the market in that area. It won't last long but it will probably weaken the bid price. What you can be sure of is that the buyers will have a stopping point, and only they really know where that is. As I said before, in the past I have seen auction values both above and below area comps and appraisals. The buyers will tell us what the property is worth right now. We'll all be a lot smarter on Saturday afternoon.

We don't utilize MLS services as we sell all over the country and consequently couldn't be a member of each group. 30-A Auction Services may choose to, though. If so, then I would applaud it.

Get registered by your visiting buyer by Friday afternoon. It won't cost you anything but preventing the risk of lost opportunity. If your buyer should decide to jump in & buy, I couldn't pay you unless you are properly registered. Contact Karen in my office for a BP form. She'll fax it right out. (800) 257-4161

Long day tomorrow. Please contact me on my cell should anyone have any questions. (863) 581-9306

See you at the auction.

If you think about it Cork you are not paying more to close! I don't know if you are familiar with this particular auction process. The properties will be reduced significantly from the original prices they were listed on the market for. So the buyer will still come out nicely. An auction is not to trick buyers or pressure them if that were the case they would not be around. I think you may need to contact the companies to ask these questions or concerns you may have before saying something that may not be true to this particular auction.

Thanks for the vote of confidence, Blue.

With one exception, you certainly have a good understanding of how this works. That exception would be lower price. Although in this case I believe you'll probably be right, the beauty if the auction is that buyers set the value. If strong buyer representation is present, we can only hope that the seller realizes that we have acheived market value for that particular property, under those terms & conditions, at that particular time. When the seller understands that we have all the money that is available, they then decide whether they would rather have the cash, or continue to hold the property(and it's associated costs) indefinitely, or throw the deal on the table out and continue to negotiate by private treaty (Risky...the buyer is free to walk).

As you can see, it's just as important for a seller to understand the entire process as it is for the buyer!

I'm on the road in 30 minutes to see you guys. Let's have an auction!