Real Estate Auctions

• Who does a Real Estate Auction Work?

  How Realtors can be involved:

  Referring Agent/Broker
  A referring real estate agent or broker refers a seller to an auctioneer, (or a real estate agent who also registered auctioneer) and receives a referral fee the auctioneer. The broker/ or agent introduces a potential seller to an auctioneer. The broker or agent may be instrumental in convincing the seller in the merits of real estate auction.
  
  Referring agent/broker activities:
  • Refer seller to auction firm
  • Refer to the Auction Firm Criteria Checklist to assist you in choosing an auction firm to refer clients and customers
  • Learn the auction firm's commission for the referring a seller (referring broker commissions and responsibilities may vary)
  • Help seller analyze his or her needs, the property, and the market to determine if it is a good auction situation. Compare to negotiated sale.
  • Refer seller to real estate auction firm
  • If a negotiated sale listing agreement exists, will have to contact local or regional regulations prior to entering into any current agreements.
  Types of agreements used in this situation:
  • Auction contract to supersede listing agreement
  Cooperating Agent/Broker
  A cooperating (selling) agent is any agent who sells a property; he or she may be the (1) the subagent or listing agent of the seller; (2) a buyer's agent' or (3) a dual agent. A cooperating agent or broker registers a buyer who purchases property offered through an auction, and then earns a commission established by the auction firm. This broker may accompany the bidder to pre-auction events and, on auction day, bring the bidder, register him or her as a prospect, and receive a portion of the commission paid by the seller.

   

  Cooperating agent/broker activities:
  Before auction day:
  
  • Call auction companies to be placed on their mailing lists
  • Attend real estate auctions to learn how they work
  • Advertise yourself as a real estate broker who is knowledgeable about auctions so that you can obtain prospects
  • Attend pre-auction seminars or other activities
  • Show auction inventory to prospects
  • Help prospect determine the market value of a property prior to sale by becoming familiar with it (check property indebtedness, the title, lien and market conditions, and read the due diligence or bidders packet)
  • Learn the commission for registering a successful buyer
  • Learn the terms of the auction
  • Register bidder prior to the auction, depending on the requirements
  • Assist bidder with choices and auction strategy
  
  During auction day:
  
  • Bring bidders/prospects to the auction
  • Help them in registration
  • Assist bidder with choices and auction strategy
  • Accompany successful bidder to contract room
  
  After auction day:
  
  • Collect commission check form closing (usually handled by title or escrow company)
  Types of agreements used in this situation:
  • Buyer registration for open houses
  • Bidder registration for pre-auction
  • Broker registration day of auction
  • Broker memorandum as part of the auction sales contract

  
  Listing (Co-broker) Agent/Broker
  A listing agent is an agent of the seller who markets the seller's property and represents the seller during the sale and the closing of the seller's property. In a sale by auction, he or she handles many of the traditional real estate functions and shares the commission based on the amount of involvement and the relationship defined by the two parties. This relationship is beneficial for auctioneer and agent when services by a local auction or real estate company are needed or when a real estate agent identifies a potential auction situation for a seller and the agent is not an auctioneer.
  
  Listing (co-broker) agent/broker activities:
  Before auction day:
  
  • Provide the lead
  • If a negotiated sale listing agreement exists, cancel the previous listing to be superseded by an auction contract. The referring agent/broker signs this contract. Send a notice to MLS stating that the property will be sold at public auction.
  • If available, provide fact sheet on the property
  • Perform market analysis
  • Provide local licensing information
  • Complete due diligence
  • Hold open houses for inspection
  • Order and obtain signs, photographs, keys
  • Obtain bids for maintenance and supervise property management
  • Assist bidders with pre-qualification process
  • Provide feedback to the seller (progress reports)
  
  During auction day:
  
  • As bid assistant, assist auctioneers in bid process
  • Accompany buyer to contract signing room
  
  Following auction day:
  
  • Help buyers with post-auction inspections, insurance, financing, etc.
  • Assist in pre-closing events
  • Attend closing
  • Buyer required independent Legal representation
  Types of agreements used in this situation:
  • Listing agreement between the real estate broker, auctioneer, and seller
  • Auction contract to supersede listing agreement
  • Pre-auction agreements outlining responsibilities of each part
  • Special auction sales contracts and addendum
  • Prospect registration forms
  • Bidder packets

  The information included on this website is a summary of information available from a number of sources, some of which have NOT been independently verified. Various provinces or states regulation will vary. Such information and opinions are supplied without any warranties or representation; either expressed or implied, whatsoever. It will be necessary to verify this information by your local real estate board or by independent legal counsel. The above information was presented for discussion purposed only.