Buyers Forum

Auction FAQ

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What is a real estate auction?

A Real Estate Auction is an accelerated method of buying and selling real estate. It is an intense and fast paced real estate marketing process that involves the public sale of property through open, competitive bidding and can be held on location, broadcast over the Internet or processed through sealed bids.

What are the general differences between a public auction and a foreclosure?

Generally, a public auction is for sale by owner. The owner is not in financial distress, but has concluded that selling his/her property at a Higgenbotham auction is the most effective method. As auction marketing moves into the mainstream, more people are finding that selling their real estate at auction to be the most efficient way to maximize value in a very timely manner.

A foreclosure, on the other hand, is a forced sale by creditors.

This is my first auction and I’m not sure how to bid?

What to do if you are attending the auction;

Step 1: Register to bid by filling out a bidder card at the registration table. By registering to bid, the buyer acknowledges that they have reviewed and understand the information in the bid packet and the Contract of Sale agreement. The bidder also acknowledges that immediately following the auction, they are prepared to execute the Contract of Sale agreement and pay the appropriate deposit at that time in a form that has previously been deemed acceptable to the Auction Company.

Step 2: Determine how much you are willing to pay for a piece of property. Since your needs and desires are unique, your evaluation of the property will be different from anyone else’s.

Step 3: As the auctioneer progresses in his call for bids, simply raise your hand when you want to bid. If you’re not sure if you’re in or out, raise your hand again and the auctioneer will keep you in. He will not let you bid against yourself. The auction will be conducted under the total control of the auctioneer.

Step 4: If you have any questions, motion for one of Higgenbotham’s Auction Team members. These ringmen are here to help you understand the process completely.

What do I need to bring to the auction in order to bid?

Potential buyers are required to bring cash, certified funds, business or personal check in the amount of the pre-determined deposit to bid at a Higgenbotham auction. Always check with Higgenbotham before each sale to determine what form of deposit will be required.

Do I need to pre-qualify?

No. We normally do not require any pre-qualification to bid; however, if you intend to obtain bank financing, the bank will require you to qualify for their loan. The deposit you make on auction day is not contingent upon financing. Deposits are required for all online auctions.

Are auction sales contingent on inspection?

All sales are on an “as-is” basis. There are no warranties as to the condition and/or the fitness of the property for a particular use. We do our very best to provide ample documentation about the auction properties but Higgenbotham Auctioneers encourages all buyers to do their due diligence prior to sale day for their own protection.

If I win the auction, what happens to my deposit money?

The deposit will count as a credit towards the purchase price of the property and placed in an escrow account. Please note; it is the purchaser’s responsibility to obtain financing. If you plan to use a mortgage to purchase the property, we recommend that you apply for the loan prior to bidding on the real estate.

When can I inspect the property?

Higgenbotham Auctioneers schedules previews on most properties and will make every effort to afford ample access to assist in your purchase decision.

What is an absolute auction?

An absolute auction is a public auction without a reserve or minimum price/bid. This means that the property, once the auction begins, will be sold that day to the last and highest bidder.

What does the term “reserve” mean?

Under a reserve auction the auctioneers will submit the highest and best bid to the seller. The seller has the right to accept or reject that bid. If the property is not labeled as absolute, it will be sold on a reserve basis.

What is the Buyer’s Premium?

The buyer’s premium is an amount that is added to the high bid for our auctions. Higgenbotham charges 10% buyers premium additional to the winning bid. (Bid price + 10% Buyer premium = Contract price).

What are the advantages to a buyer in an auction situation?

At a Higgenbotham auction the buyer knows the seller is fully committed to sell. Our auction agreements obligate the seller to transfer title to the highest bidder in an absolute auction; likewise the auction agreement obligates the seller to transfer title to the highest bidder that meets or exceeds the reserve price in a non-absolute offering. Our buyer knows he is getting the property at a fair price. A buyer feels committed to the purchase knowing that there is a contending bid just one increment under the purchase price. A buyer can withdraw from the bidding at any time prior to the final gavel. Our buyer sees many offerings in the same place at the same time which enables him to make market comparisons quickly and easily.

Other benefits are:

Buyers set their own purchase price.
Auctions eliminate long back and forth negotiation periods.
Auctions reduce time needed to purchase property.
Buyers do not have to worry about contingencies because purchasing and closing dates are known in advance of the sale.
Buyers can receive favorable pre-sale financing.
Due diligence is performed in advance of the sale.

How long do I have to close on the property?

The time frame varies depending upon the type of property to be auctioned. Generally, our contracts stipulate a 30 day settlement from auction day to closing for residential properties and 45 days to closing on commercial properties.

Should real estate agents look favorably on auctions?

Increasingly, more and more real estate agents are discovering the benefits of Higgenbotham real estate auctions. They know that auctions promote action in an industry that thrives on activity. Real estate agents be a part in auctions themselves. When an agent brings a buyer to a Higgenbotham auction, and that buyer purchases property, the agent will receive a commission.

The amount and structure of any commissions to be offered are determined by the particular terms and conditions of the auction contract.

Other reasons:

Auction provides a list of ready and qualified buyers.
Offers your clients and customers many new selling and purchasing options.
Increases market share and revenue - new business opportunities are added.
Enhances your company’s image. You sell more properties in a timely manner.
Helps to develop your own market niche by being able to offer new products and services other agents aren’t providing.
Auctions are events that appeal to all types ofpeople – an auction brings them in to look at all the listings you hold, not just the auction listing.
Auctions create referral and return business.
Builds rapport with auction firms.
And as agents you don’t have to be auctioneers to earn commissions -
You can earn referral fees as referring agent/broker
You can work as cooperating agent/broker
You can work as listing agent/broker.