Q: I have noticed that there are a greater number of advertisements for real estate auctions than in the past. Some of these are foreclosure sales, others are not. I have some money to invest and these auctions seem like opportunities. What do I need to know?
A: There are several types of auctions taking place today. Some Realtors have turned to auctions as a way to make sales happen. Some lenders have turned to auctions to rid themselves of foreclosed properties. You are wise to learn more about auctions before diving into the bidding.
During the weeks before the auction, visit the properties that interest you. Determine what you want to spend and how you will finance the purchase. Investigate the rules of the auctions you plan to attend. For example, some require that you be pre-approved for financing before bidding. Obtain answers to any questions you have about the properties.
You register on the day of the auction by showing a drivers license and completing a simple form. The registration period is usually one half to two hours before the sale so be prepared to be on time and to move fast. If the sale is only for a single home without furnishings or personal items, the sale may be completed in 10 minutes.
Auctions usually begin promptly at the appointed time with opening remarks summarizing, for the record, the terms of sale, the methods of bidding and any last minute changes or disclosures. These comments usually take only a few minutes and conclude with the auctioneer answering any final questions. Rules about payment methods vary but you may certainly use cash and frequently personal checks for down payment.
The auctioneer will have assistants called ring staff who assure anyone trying to bid is recognized and that all bids are recorded with the auctioneer. They may also answer questions during the auction, including asking the auctioneer to pause if necessary. The bids and questions about who has the high bid are always resolved by the auctioneer, who has complete and final authority.
Most real estate auctions have a minimum acceptable bid, called a reserve. It has become the custom not to announce the reserve in advance at the auction but once the pre-set minimum price has been bid, an announcement is made that the reserve has been met and the sale will definitely happen.
From the first bid, things move quickly. The auctioneer can and will say "sold" as soon as he or she determines that the final bid has been made. The person who made the final bid is required to follow through with the purchase of the property. You may want to meet with an attorney to obtain additional advice about real estate auctions before participating.
Attorney Sylvia Heldreth is a certified specialist in real estate law. Her office is located at 1215 Miramar St., in Cape Coral.
This article is not intended as specific legal advice to anyone and is based upon facts that change from time to time. Individuals should seek legal counsel before acting upon any matter involving the law.