A Step-By-Step Guide to the Real Estate Auction Process

Navigating the real estate market can be a complex endeavor, but choosing to sell your property through an auction can streamline the process and potentially yield excellent results. Auctions offer an efficient, transparent way to sell real estate, ensuring your property is presented to a competitive pool of potential buyers.

Real estate auctions work because they create urgency. An auction date and time motivates potential buyers to act. The process is truly hands-off for sellers. And, sellers to dictate when, where and how the sale will happen.

“Once they (CJ Auctions) came in, it all just happened so quickly and so professionally. We were just kind of left with our mouth open because we didn’t expect it to go so smoothly and so quickly. And they took care of everything. All I had to do was show up at closing. I will be forever grateful for what they did for our family.”

 – Kary Warren, Lamb Ranch Trustee.

Property owners benefit from selling real estate at auction because they can minimize carrying costs, eliminate risks associated with pre-sale inspections and know when their property will sell. Additionally, there is no need for extensive repairs or upgrades because property offered at auction is typically sold ‘as is, where is’ meaning that bidders are offering to buy the property in the condition it is in on sale day. There are no sale contingencies and no negotiating.

Competition assures that owners are getting the best price for real estate at auction. At auction you get competing offers all at once. Each bid is simply an offer to purchase. The sales price is determined by competing bids that go up, not down.

Here’s a comprehensive guide to understanding the auction process from start to finish.

Discovery – Initial Consultation

Your auction journey begins with an on-site visit to learn about your property, the local real estate market and most importantly, your goals and objectives. This meeting serves as a foundation for the entire process:

• Discuss your goals and which sales method – auction or listing – is the best fit for what you want to accomplish.
• Discover what’s unique about your property, gain an overall understanding of your real estate asset and assess your property’s potential value.
• Outline the auction sales process including deliverables, timeline and post-sale activity.
• Address any remaining questions you or your family may have about the process, risks and benefits thoroughly with your real estate team.

Seller Responsibilities

Property owners selling via auction have similar duties to those in any real estate transaction.

• Affirm property details such as shared ownership, legal descriptions, right of ways, acreage, etc.
• Disclose financial details about existing mortgages, liens, etc.
• Disclosure of any known hazards or defects.
• Make the property available for pre-sale work, inspections or open houses during the marketing period. A key difference with auction is that inspections/open houses are typically limited to 3 or less and scheduled ahead of time – no last-minute showings.

Auctioneer Responsibilities

• Keep you advised and informed with responsive communication throughout the process.
• Set the auction date, time and location.
• Package your property for maximum pricing potential through parceling.
• Determine if a land survey is necessary and, if so, manage the survey process.
• Organize all relevant property documentation, disclosures and other legal paperwork.
• Prepare marketing plan and manage marketing process.
• Organize and manage your real estate auction and sale process.
• Organize and manage real estate closing.

Marketing

A strategic marketing plan is crucial for drawing in potential buyers. The tactics employed to market your property typically include:

• Professional photography and videography showcasing your property through compelling visuals.
• Custom webpage illustrating your property.
• Online listing placements on real estate websites such as Zillow & Realtor.com.
• Social media campaigns that engage audiences and generate interest.
• Email marketing to targeted buyers, investors, brokers and related professionals.
• Print advertising in local newspapers and select industry publications.
• On-site signs and off-site directional signs to inform and attract local buyers.

Inspections and Open Houses

Inspections and/or open houses are a pivotal part of the auction process, offering potential buyers the chance to view the property firsthand. A key benefit of selling via auction is that these are typically limited to 3 or fewer and they are scheduled as part of the marketing plan so that you can plan and never have to hassle with a last-minute call to show your property.

• Inspections and/or open house events are scheduled on fixed days and times and promoted as part of your marketing plan. Typically, there are 1 or 2 events prior to sale day and 1 event on sale day.
• A representative from your real estate auction will be present to answer questions and offer details about your property during a set time period. They’ll collect feedback from attendees to gauge interest and address any potential issues that may impact your sale.

Auction Day

The entire process comes together on sale day.

• Your real estate auction team will set up the property for sale posting additional sale day signage directing prospective bidders to the auction.
• Prospective buyers will be able to arrive at least one-hour prior to auction time to inspect the property, register to bid, and ask any questions about the property or auction process.
• At auction time, the auctioneer will make pre-auction announcements reading the sale terms, conditions, and disclosures into the record. Then your auctioneer will ask the audience if there are any questions for the record.
• Once all questions have been answered, the auctioneer opens the competition with an initial starting bid.
• Potential buyers make successive bids, each higher than the previous one. It’s a fast and exciting pace. Auctioneers typically work with a team consisting of the auctioneer, ringmen and an auction manager.
• Your auctioneer will generate maximum value for the property by expediting competitive bidding while ensuring a transparent and fair process for all bidders.
• The bidding process continues until a high bidder is declared.
• If there are multiple property/parcels, the successful high bidder wins the right to choose a property/parcel or properties/parcels from a grouping of similar or like-kind properties. After the high bidder’s selection, the property/parcels they chose are deleted from the group and the bidding commences for any remaining property/parcels.
• The bidding process continues until all properties/parcels have been sold.

Post-Auction

Immediately following the auction, high bidders will meet with the auction manager to complete the sale.

• High bidders will sign the purchase agreement and pay a non-refundable deposit.
• The auction manager will review the closing process and answer any buyer questions.
• The auction manager will then expedite the closing process. Settlement typically occurs within 30 to 45 days of seller acceptance.

Conclusion

Selling your property at auction can be a powerful method for achieving a successful and timely sale. Understanding each step ensures you are well-prepared and can collaborate effectively with your auctioneer to maximize the benefits of this sales approach.

If you have questions or need further assistance about selling your property at auction, don’t hesitate to reach out. We’re here to guide you through the auction process and help you achieve the best possible outcome.

Stay tuned for our next post, where we’ll provide tips on preparing your property for auction to ensure it looks its best and captivates the right buyers.