by Shawn Terrel, Vice President, UCAS
United Country jumped into the world of real estate auctions three years ago, and more of our local offices get involved with auctioneers every day. Though this method of real estate marketing is become common in markets across the U.S., some buyers, sellers and agents still have questions.
Auctions are a great fit for many types of properties, but how do you figure out if it’s right for your property? We want to help make your decision both simple and seamless, so we’ve put together a checklist for qualifying property and sellers when considering the auction method of marketing.
Questions To Ask When Qualifying Your Seller
- How many people own the property?
- What is the ownership structure (individual, partnership, corporation)?
- How long have they owned the property?
- How did they acquire the property (buy, inherit, 1031 exchange, etc)?
- Is the seller capable of up-front marketing funds?
- Does the seller live near the property?
- How does the seller get along with the neighboring property owners?
- How well is the seller liked in the community?
- Has the seller ever had an auction?
- Has the seller ever offered this property at auction?
- Why are they selling the property?
- Does the seller need to sell the property?
- How long has the property been for sale?
- How long can they afford to hold the property?
- What are their monthly holding costs (taxes, HOA dues, utilities, upkeep, etc)?
- What are their plans after the sale?
- What is the seller’s current financial state?
- Are there monthly or annual maintenance fees?
- Does the seller have the ability to sell “absolute”?
- Is the seller flexible on the sale price?
- Is seller willing and capable of paying out of pocket an amount on top of the high bid to pay off the mortgage and deliver a clear title?
Questions To Ask When Qualifying the Property
- Does the seller have realistic expectations?
- Does the seller have any equity in the property?
- Is the property priced accordingly to its current condition?
- Does the seller have the ability to sell the property “absolute”?
- Is there a current appraisal on the property (past 24 months)?
- What is the tax-assessed value of the property?
- Are there any loans on the property (who holds mortgage)?
- Is the property currently listed?
- How long was it listed (days on market)?
- Who was the broker?
- Were there any offers made on the property? (If so, how many offers and dollar amount)
- Did the property receive good local and national exposure?
- Are there real estate signs on the property?
- How long has the property been without signs on it (freshen up)?
- Does seller have any previous flyers or advertising of the property?
- What is the current condition of the property?
- Are the utilities intact on the property?
- Is there good, legal access to the property?
- Has there been any recent change in the local real estate market?
- Are there factors or problems that will directly affect the fair market value (hazardous materials, easements, access, economic obsolesces, zoning, deed restrictions, historical district, etc)?
- What are the annual property taxes?
- Can you secure a traditional listing on the property after the auction if it does not sell?
- Seller expectations higher than the current market value.
- Seller not willing to waiver from price expectations.
- Seller is extremely overbearing leading into the auction negotiations and refuses to give control to auctioneer.
- Seller has had multiple auctions with multiple firms and is not happy with past experiences and/or openly predicts failure during auction negotiation process.
- Property has been listed for long period of time with no or minimal price reduction.
- Seller unwilling to fully invest into a well-planned marketing program and wants to drastically cut the marketing costs.
- Property is not in good condition for auction and seller will not make improvements.
- Seller is not giving full disclosure and information about the property (fails to tell the whole story about the property).
Have you bought or sold – or represented a client who bought or sold – a property through an auction? Did you ask or answer any of these questions? We’d love to hear about your experience.