4. Getting Started in Real Estate Auctions

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4. Getting Started in Real Estate Auctions

• Finding real estate auction properties and firms
• Working with real estate auction firms

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Steps

1. Review state laws specific to real estate auction
2. Understand participation methods,
   responsibilities, and forms used
3. Select real estate auction firms
4. Attend auctions

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Step 1 Review State Laws Specific to Auction

• Laws that pertain to selling real estate by
  auction
• Auction licensing requirements
• How to obtain education

Members of the National Auctioneers Association
may check state license laws at
www.auctioneers.org.
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Step 2 Understand Methods of Participation,
Responsibilities, and Forms Used

• Referring agent/broker
• Listing agent/broker
• Buyer's agent/broker

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Referring Agent Responsibilities

• Help analyze needs, property, and market
• Refer seller to auction firm
• Cancel previous listing
• Send notice to MLS
• Collect referral fee

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REALTOR Code of Ethics Standard of Practice 16-4
REALTORS shall not solicit a listing which is
currently listed exclusively with another broker.
However, if the listing broker, when asked by the
REALTOR, refuses to disclose the expiration date
and nature of such listing i.e., an exclusive
right to sell, an exclusive agency, open listing,
or other form of contractual agreement between
the listing broker and the client, the REALTOR
may contact the owner to secure such information
and may discuss the terms upon which the REALTOR
might take a future listing or, alternatively,
may take a listing to become effective upon
expiration of any existing exclusive listing.
(Amended 1/94)
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REALTOR Code of Ethics Standard of Practice 16-6
When REALTORS are contacted by the client of
another REALTOR regarding the creation of an
exclusive relationship to provide the same type
of service, and REALTORS have not directly or
indirectly initiated such discussions, they may
discuss the terms upon which they might enter
into a future agreement or, alternatively, may
enter into an agreement which becomes effective
upon expiration of any existing exclusive
agreement. (Amended 1/98)
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REALTOR Code of Ethics Standard of Practice 16-3
Article 16 does not preclude REALTORS from
contacting the client of another broker for the
purpose of offering to provide, or entering into
a contract to provide, a different type of real
estate service unrelated to the type of service
currently being provided (e.g., property
management as opposed to brokerage) or from
offering the same type of service for property
not subject to other brokers exclusive
agreements. However, information received through
a Multiple Listing Service or any other offer of
cooperation may not be used to target clients of
other REALTORS to whom such offers to provide
services may be made. (Amended 1/04)
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Listing Agent ResponsibilitiesBefore Auction Day

• Providing lead
• Canceling previous listing
• Sending notice to MLS
• Providing fact sheet on the property
• Performing market analysis
• Providing local licensing information

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Listing Agent ResponsibilitiesBefore Auction Day

• Completing due diligence
• Conducting property inspections
• Obtaining signs, photos, and keys
• Getting bids for maintenance and prop mgmt
• Assisting bidders with pre-qualification process
• Providing feedback to seller

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Listing Agent Responsibilities On auction day

• Accompany successful bidder to sign the contract

After auction day

• Help buyers with post-auction inspections,
  insurance, financing, etc.
• Assist in pre-closing events
• Attend closing

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Listing Agent Responsibilities Forms used

• Listing agreement between the real estate broker,
  auctioneer, and seller
• Auction contract to supersede listing agreement
• Pre-auction agreement outlining responsibilities
  of each party
• Special auction sales contract and addenda
• Prospect registration form
• Bidder's packet

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Buyers Agent/Broker Responsibilities Primary
responsibility is finding auction inventory

• E-mail lists
• Web sites
• Newspapers

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Web Sites to Research in Addition to Local MLS

• REALTOR.com
• RLIland.net
• Auctioneers.org
• NAArealestateauctions.com
• realtybid.com
• foreclosure.com and foreclosures.com
• Landandfarm.com
• Landbook.com
• Tranzon.com
• Marknetalliance.com

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Buyers Agent/Broker Responsibilities

• Showing auction inventory to prospects
• Reading the property information package or
  bidder's packet
• Helping prospects determine market value of
  property prior to sale
• Registering bidder prior to auction
• Assisting bidder with choices and auction
  strategy

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Buyers Need to Provide the Following at Auction

• Good-faith deposit
• Personal check
• Letter of guarantee
• Identification

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Forms for Buyers Agents

• Buyer registration for open houses
• Bidder registration for pre-auction
• Broker registration day of the auction
• Broker memorandum as part of the auction sales
  contract

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Buyers Agent Compensation

• Established in writing by auction firm in advance
  of auction
• Buyer's agents need to determine if commission is
  paid on bid price, bid price plus buyer's
  premium, or some other amount.

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Step 3 Select Real Estate Auction Firms Auction
firm should

• Be a REALTOR firm if selling real estate
• Specialize in real estate auctions
• Have track record in auction business
• Be staffed with persons with professional
  designations

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Step 3 Select Real Estate Auction Firms Auction
firm should

• Have staff for research, marketing, and public
  relations
• Provide references
• Established and financially secure
• Explain company charges and services
• Exhibit familiarity with market

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Step 3 Select Real Estate Auction
Firms Auctioneer should

• Have experience selling similar properties
• Be able to tell you how many, what type and what
  price properties he or she has sold
• Be able to explain percentage of units sold that
  have actually closed

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All Real Estate Professionals Should Ask

• Offering broker participation?
• Offering a referral fee or commission?
• What are contingencies and what disclosure
  documents is seller providing?
• Will sale be absolute or will seller have right
  to reject bid?

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All Real Estate Professionals Should Ask

• Type of deposit required of buyers?
• Is property as is? If so, what representations re
  condition, title, etc.?
• Closing period?
• What else is expected of the buyer or seller in
  the agreement?

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Buyers Reps Should Ask

• What are registration requirements for a buyer's
  agent?
• Is it necessary to have registration form signed
  by buyer in advance?
• Is a pre-bid necessary?
• Should I attend auction with my buyer?

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4. Attend Auctions

• Is sales contract available for review?
• How easy is registration process?
• Do staff stimulate maximum bidding potential?
• Can bidders understand cadence of auctioneer?
• Does firm provide financial or pre-qualification
  services to bidders?

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4. Attend Auctions

• Environment clean? Décor pleasant? Restrooms
  available? Food and beverages provided?
• Quality photos, slides, or video of the property
  used during the auction?
• Auction recorded?

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Introduction to Real Estate Auction Thank you for
your participation!