Tuesday, November 11, 2008

Auctions: Part 1 - Where is the auction being held?

The first thing any buyer should ask is "where is the auction being held?" We are seeing real estate auctions in many arenas:
  • Courthouse Steps
  • At the Property
  • In Ballrooms, Convention Centers and other Large Meeting Spaces
Are they all the same? The answer is - NO. By understanding where the auction is, you'll understand the intention behind the auction itself.

Auctions done at the courthouse steps are generally ordered by a judge and/or a pre-arranged condition of a contract. In other words, judges charged with determining final disposition of marital estates for a divorce, personal estates following someone's death, or liquidation of someone's assets for collection or bankruptsy proceedings may order an auction on the courthouse steps. In addition, foreclosure auctions are done at the courthouse steps.

You map also see advertisements in the local newspapers, online, on billboards and in informercials for other auctions, held by privately hired auctioneers. These are very different.

Auctions done at the courthouse steps are advertised through public notices in the newspaper. They are "Absolute" auctions (see next post), and rain or shine, the property will be auctioned that day. The auctioneer is under no obligation to do anything special to attempt to get the highest price for the seller. The auctioneer has only the same public information that is available to you if you do your research.

Auctions done at the property and in ballrooms are done by private auctioneers, hired not just for their auctioneer license, but also for their marketing skills and advertising program. They are expected to advocate for the seller. If, on the day of the auction, there are not many registered buyers, or the auctioneer, for ANY reason, feels that the auction is not in the best interest of the seller, the auctioneer has not only the right, but the obligation, to postpone the sale.

In our next post, when we'll will explain the 3 types of auction.
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