Seller FAQ

How long does it take to have an auction?

On personal property, where only signs and newspapers or radio ads may be used, it can be done in as little as one week. However, the more time the auctioneer has, the better job we can do and the more value we can add.

Real estate is usually sold 30 to 45 days after a listing agreement is signed.  Sellers receive their funds 30 days after the auction event.  This allows sellers to confidently plan when they will have funds available for use.

What does the auction service cost?

Auction companies charge in a variety of ways.  Some charge the seller a commission, but have hourly charges for appraisal, lotting, set-up, moving and storage. Others charge a commission to the seller and an additional buyers’ premium.  Some just charge a buyers’ premium, which is added to the winning bid, to determine the selling price of the property or item.

Advertising budgets are an integral part of the auction. They are an insurance policy for good attendance. The budget for the auction is suggested by the auctioneer but, ultimately, determined by the seller along with a payment schedule. All of these items are negotiated and agreed upon in advance. Depending on the sales volume anticipated in the auction, the charges for personal property range from 15% to 35% and 2% to 15% for real estate.

In some multi-owner auctions, the only charge to sellers is the advertising contribution and the buyers’ premium becomes the commission.

While each situation is different, these are the general guidelines:

  • The Re/Max 100 Auction Team first looks at what a seller has to sell and determines what the recommended advertising budget will be.
  • RE/MAX 100 then provides the seller with a written proposal detailing all the costs.
  • The commission charge ranges from 5% to 9.09% on real estate auctions, using the 10% buyers’ premium as the source of the funds.
  • On personal property, commission ranges from 15-19%, using a combination of buyer’s premium and sales commission.
  • The amount of the charge is influenced by the seller’s decisions regarding whether the property is being sold at absolute auction, with no minimum bid, or with reserve, what the reserve will be on the real estate, what the budget will be for advertising, and what sales’ incentives are to be offered to real estate brokers, who bring a winning bidder to the auction.
  • When all factors are considered, auction costs are competitive with traditional private treaty sales’ costs.

What happens if I pay the advertising, RE/MAX 100 conducts a real estate auction, and the winning bid does not equal or exceed the reserve?

The seller can decide to accept the winning bidder’s offer, as the best the market will produce, can make a counter offer to the buyer, or can decline the winning bid.

When the negotiations are unsuccessful and the real property is not sold, there is an agreed marketing service fee charged by RE/MAX 100 to cover overhead. It is normally a percentage of the chosen reserve. This fee applies on any sales commission earned during the post auction listing period.

What happens if the buyer’s check bounces?

Return of checks for “Insufficient Funds” happens in all commercial transactions. In auctions, we endeavor to collect all bad checks for you, using diplomacy and the legal system.  We do not charge any commission for items which are not paid,  until the amounts due are fully paid.

On real estate, what happens if the buyer defaults?

Generally, the terms of the sales and purchase agreement states, in Old Testament language, that the purchaser forfeits his down payment as partial liquidated damages.  However, the down payment remains in an escrow account, until either the parties agree on its disposition or a judge orders it disbursed.

The auction listing agreement calls for the seller, or person advancing the advertising, to receive a return of the advertising funds they advanced first . The remaining forfeited funds are split between the seller and auctioneer/broker. In no event, does the auctioneer/broker receive more that they would have if the property had closed.

What happens then, if I still want the property sold?

In a default situation, the property is marketed to the runner-up bidder, when possible, or returned to the market to either be re-auctioned or listed privately.   Defaults have happened, and can happen, but they are rare.

Why do you ask sellers to do pest inspections, Phase 1 – hazardous materials inspections, home inspections, obtain title insurance commitments and even get bids for repairs in advance of the auction?

Buyers, who want to bid on any real estate, need to make executive decisions regarding value and the suitability of properties.  As many questions as can be answered, in advance, regarding condition and costs for repair will give bidders confidence and a willingness to bid at a higher level.  In some cases, the prospective bidder or buyer is just driving by, stops to see the auction and needs to immediately know as much as possible before bidding.

This information helps build their confidence. In most cases, the sales and purchase agreement call for the buyer, who benefits from this knowledge, to reimburse the seller for these expenses, in addition to the sale price of the real estate.

What if I already have my property listed with a broker? Can I still have an auction?

Your agent or broker can remain involved, participate in the marketing and share in the commissions.  They can be a major help in your success, by helping your auctioneer learn the property, and in getting additional bidders to attend the auction.  You increase your sales and marketing team but do not increase your costs.

If your property is listed and you are considering an auction, do not reduce your asking price.  Your published price is a barrier, which is hard to exceed, in the auction process.  So, please do not lower it before exploring the auction alternative.

When is the best time to auction real estate?

The best time is not any particular season.  The answer is first, before it is ever priced to anyone.   The first sign that goes up is an auction sign, instead of a realtor’s “For Sale” sign and there is no price.   Properties should be offered 30 days before sellers want the money or to move.  Every property owner wants to sell when their property looks its best.  Therefore, auctioning your property when there are fewer competing properties may be a wise move. The best time to sell is when you are ready and want the money.

Do I have to sell the property when I put it up for auction?

No, you can have a public auction with a confidential reserve.

What is an Auction?

Auction Professionals of Ky - Video - What is an Auction?


Victorian Home Auction
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