Buyer FAQs and Terminology

BUYER FAQs | AUCTION TERMINOLOGY

buyer FAQS

Q. What type of property is sold at auction?

A. All types of properties – residential properties, farms, crop land, commercial buildings, resort properties, undeveloped land & investment properties – all are effectively marketed and sold through the auction method. Today, most auctions are not the result of distress, but rather a seller choosing a cost-effective, accelerated method of selling their property now instead of waiting months or years for a sale by other means.

Q. Is the auction method successful?

A. Yes and its popularity is growing annually. In 1990 $10 billion worth of real estate was sold at auction. In 2007 that figure had jumped to $60 billion. Why the growth? Smart buyers now recognize that market-driven sale by auction is a cost-effective means to efficiently buy properties. The auction method puts the buyer in control of their time and resources locating and acquiring properties.

Q. What do I need to know before bidding?

A. Before you bid you should inspect the property to determine its conditions. You’ll want to check property records for relevant information. You should determine what is included in the sale.  You may also want to obtain a pre-approved mortgage or line of credit because the purchase and sale agreement will not include any financing contingency. You should review all auction documents including the property information package, the real estate contract and, if necessary, obtain professional advice.

Q. Is the physical condition of the property warranted?

A. No. Conditions of properties vary. Properties are sold “as is-where is”.  You will want to evaluate the overall condition of the property and determine if there are any defects. While these may be acceptable to you, it may affect the amount you want to bid, so look before you bid.  Wilson Auctioneers, Inc. encourages all bidders to inspect the property prior to the sale.

Q. How can I be assured of getting clear title if I am the high bidder?

A. Our real estate contract calls for the seller to give clear, marketable title and provide an owners policy of title insurance in the amount of the purchase price or provide an abstract of title. We can arrange for all transactions to close with a reputable title company who performs title searches, prepares all documents to transfer title and sends documents to be recorded in the public records of the county where the property is located.

Q. What are the Terms and Conditions of the sale?

A. The Terms and Conditions govern the particular sale. They include information such as the required earnest money deposit amount, when the transaction must close and other key facts. You should familiarize yourself with these prior to the auction. Summaries of the Terms and Conditions are available within the property listing either on our website, or on the printed Brochure.

Terms and Conditions are available via download, as part of the Property Information Package which is typically available at our website within 10 days of the Auction. You should note that at an auction sale, any announcements made by the auctioneer on the day of sale take precedence over previously published or verbally conveyed terms and conditions. So, be attentive to the announcements at the sale!

Q. How do I bid at an auction?

A. In order to bid at an auction, you need to attract the auctioneer's attention. You can hold up your bidder card, raise your hand or shout out "Yes".  Also there will be bid assistants circulating among the bidders who can also convey your bid to the auctioneer on your behalf. If you are ever unsure whether your bid is the high bid at any given time, feel free to ask a bid assistant or the auctioneer to confirm this. The auctioneer wants to provide you every opportunity to place your bid and will not allow you to bid against yourself.

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AUCTION TERMINOLOGY

ABSOLUTE AUCTION - An auction without reserve.  (See Auction Without Reserve) An auction in which property is sold to the highest bidder regardless of price. This typically generates a much greater interest among potential buyers resulting in greater attendance at the auction, and a higher final sale price for the property in question.

ABSENTEE BID - A procedure which allows a bidder to participate in the bidding process without being physically present. A bidder who cannot attend submits an offer prior to the auction.  All arrangements for payment have been made in advance.

AS-IS - Selling the property without warranties as to the condition and/or the fitness of the property for a particular use. Buyers are solely responsible for examining and judging the property for their own protection. Otherwise known as "As Is, Where Is" and "In its Present Condition".

AUCTION WITH RESERVE (Also called Auction Subject to Confirmation) - An auction in which the seller or his agent reserves the right to accept or decline any and all bids. A minimum acceptable price may or may not be disclosed and the seller reserves the right to accept or decline any bid within a specified time.

AUCTION WITHOUT RESERVE - An Absolute Auction. (See Absolute Auction) An auction in which property is sold to the highest qualified bidder; where no minimum price will limit the bid; where the seller may not withdraw the property from the auction after the first bid has been received; and where the seller may not nullify the sale by bidding himself or through an agent. "Auction Without Reserve" is equivalent to the term "Absolute Auction".

BIDDER'S CHOICE - A method of sale whereby the successful high bidder wins the right to choose a property or properties from a grouping of similar or like-kind properties. The winning bidder then has the choice to take one property or as many as were offered in that round. After the high bidder's selection, the property is deleted from the group, and the second round of bidding commences, and so on, until all properties are sold.

BUYER'S PREMIUM - A percentage added on to your bid amount. In Real Estate it is an amount added to the high bid to determine the total contract price to be paid by the buyer. The use of the buyer's premium benefits both buyers and sellers.  Sellers benefit because it helps to defray many of the expenses associated with conducting an auction.  The buyer benefits because without the use of this tool, there may not have been an auction.  The competitive bidding process might not exist if the buyer's premium were not used to offset some of the expenses. Check the terms and conditions of the auction to determine if there is a buyer’s premium.

BROKER PARTICIPATION (Also known as broker cooperation) – An arrangement for third-party brokers to register a prospective buyer with the auction company. The broker is paid a commission by the owner of the property or the auction firm only if his prospect is the high bidder and successfully closes on the property.

DUE DILIGENCE - process of gathering information about the condition and legal status of property to be sold.

MULTI-PARCEL AUCTION - A process used in real estate auctions where a bidder has the opportunity to combine several parcels of land previously selected by other bidders, thereby creating one larger parcel out of several smaller parcels. This process is often used in conjunction with bidder's choice.

MULTIPLE PROPERTY AUCTION - A group of properties offered through a common promotional campaign. The properties to be auctioned may be owned by one seller or multiple sellers.

PREVIEW (Also called Special Inspection) - Pre-determined times made available for you to inspect the property offered for sale. You will want to evaluate the overall condition of the property and determine if there are any defects. While these may be acceptable to you, it may affect the amount you want to bid, so look before you bid. You will feel much more confident if you do this.

PROPERTY INFORMATION PACKAGE (PIP) - A package of information and instructions provided by the auction company pertaining to the property to be sold such as a contract, legal description, survey, terms and disclosure statements. 

REGISTRATION - The process you must complete in order to be a qualified bidder.  When you first get to the auction, you should ask to register and obtain a bid card.  You will be asked to show proper identification to register.  You may be required to verify that you have certified funds or cash in your possession. You must register at each auction event.  This is essential before bidding.

TERMS & CONDITIONS - The legal terms that govern the rules for a specific auction.  Each auction’s terms and conditions may vary and the bidder must understand them before participating in an auction.  They include method of payment, buyer’s premiums, possession, reserves and other limiting factors.  Usually included in published advertisements or announced by the auctioneer prior to the start of the auction.

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