Buying a home can be an emotional roller coaster ride all on it’s own. Throw in a gavel, a fast-talking guy behind a microphone, and several people all wanting the same property and you might just lose your lunch.
Since the peak of the housing market, real estate auctions have been gaining popularity. Banks all across the country are relying on this form of marketing to liquidate inventory of homes that have been foreclosed.
Selling real estate by way of auction allows the seller to control aspects of the sale not found by conventional means. Aspects like;
- > the date and time a property will sell,
- > the amount of earnest money a buyer must put up,
- > the number of days allotted to close,
- > and even the seller’s willingness to make or not make repairs.
However, the one thing that the seller does not control in these types of sales, THE PRICE.
Here in Northern Utah, real estate auctions have also been gaining popularity. Recently, a local bank put up over 50 properties on the auction block. Many of them were new homes, some of which were only partially finished. The balance were high-end building lots and undeveloped land.
Williams Auction, a national real estate auctioneering company, has also sold a fair share of properties here in Utah. Currently, they have 5 homes listed along the Wasatch Front and one in Southern Utah.
Click the links below to view individual listings.
In addition, local home-owners and investors have been experimenting with the auction method to sell their properties. You can find these listings by searching local newspapers, ksl.com classified ads, or contact a local broker versed in real estate auctions. Or, if you would like to receive updates on local real estate auctions through my newsletter, submit your request here.
Buying a home at auction has it’s benefits. For example, it’s very possible that you could buy a property at a deep discount. However, it’s important that you do your homework first. Probably the two most important things you should do before buying a property at auction are:
- Read and understand the “Terms & Conditions” thoroughly
- Inspect the property and Research the Title Report
Actually, it’s best if you contact a real estate agent to help you with this process. Most auction companies will compensate agents and brokers who represent buyers at their auctions. It won’t cost you extra, in fact the auctioneer will charge you the ”buyer’s premium” whether you use an agent or not.
The ”buyer’s premium” is a fee, which is added to the final high bid price. Typically between 5-10 percent of the bid. This fee covers marketing costs, auction expenses, broker fees etc. The amount however will not fluctuate based on if you have an agent on your side or not.
Also important to understand is whether or not the property being auctioned has a “reserve price”. A reserve price is an undisclosed amount that the seller has set. If the high bid does not meet the seller’s reserve price, then they are not obligated to sell.
If the property is being sold “absolute”, then the seller has agreed to sell the property regardless of what the high bid amount is.
