Auction Services > Auction FAQ's

1.  What is a real estate auction?

A real estate auction is a method of buying and selling real estate, which accelerates the purchasing process through the medium of an auctioneer.

2.  What are the benefits of a real estate auction?

The real estate auction is definitely a win-win proposition for everyone involved.  The seller disposes of property quickly and efficiently, thereby saving long-term carying costs such as interest, real estate taxes and maintenance.  For buyers this can mean a smart investment, since properties are usually purchased at fair market value through competitive bidding.  Because the auction sale is conducted in an open forum, both motivated buyers and motivated sellers have the assurance of watching the properties true market value emerge as the bidding process progresses.  For both the buyer and seller, fair market values for the property prevail.

3.  Are all properties suitable for auction?

Most properties, but certainly not all, are suitable by auction.  Residential property (including townhomes, condominiums, co-operative apartments and single family homes), commercial property, vacant land, even boat slips are sold at auction.  Some sellers try to sell unsuitable or unmarketable property through an auction.  This is property that has perhaps been on the market too long, causing prospective buyers to consider it "tainted" or perhaps the project itself was poorly constructed or planned.  These types of properties don't do well at auction and most reputable auction marketing companies would not accept them.  The majority of sound developments that can be marketed effectively do extremely well at auction.  The best auction marketing companies, before accepting a real estate auction of any type property will 1) know the market and, 2) analyze the property closely to ensure success for both the buyer and seller.

4.  If the property doesn't sell at auction, is it possible to still market it?

Yes.  The real estate auction marketing method has exposed the property to a large segment of the buying public.  Many times a buyer who wants the property, but is uncomfortable with the auction process will make an offer after the auction date.  In other instances offers to buy the property prior to the auction date are made and accepted.  Auction pressure forces buyers to act. 

5.  Can I be sure of getting a fair price?

The only genuine measure of value of real estate is what someone else is willing to pay for it.  An appraisal is merely an informed opinion.  It is not an offer to buy.  The real measure of value of real estate, at any given time, is what it will bring under competitive bidding from informed and motivated buyers. 

6.  Don't real estate auctions depress home values?

Not at all!  Real estate auctions reveal the true market value of a property because auctions are conducted in an open forum where all bids are known, and participants are given immediate feedback on the property's value.  At auction, values settle at the level the market can bear, neither elevated nor deflated.

7.  How are properties advertised for auction?

This varies greatly depending on the type and value of the property being sold.  One of the essential underpinnings for a successful auction is a highly aggressive marketing program.  Each auction has its own powerful promotion and advertising.  Auction marketing is an intensive effort and a well timed plan to create massive interest in the properties available for sale. 

8.  How long does it take to market the property, have the auction, and close the sale?

The time frame varies depending upon the type of property auctioned.  Generally, the process takes 30 to 45 days from listing to closing.

9.  Under what terms does a property sell at auction and who sets the terms?

The seller sets the terms with the advice of the CBSHOME Auctions.  Usual terms are that the high bidder deposits earnest money (either a percentage of the purchase price or a stated amount) and enters into a purchase contract immediately following the auction with the balance of the purchase price due usually within 30 days at the closing.  Title insurance is usually split between buyer and seller.  Properties generally sell "as is" with no warranties expessed or implied.  Clear title wil be transfered to the new owner.  Since the only issue left is price, due diligence is done in advance of the sale, such as preparation of information packages and inspection reports.

10.  How much does an auction cost?

CBSHOME Auctions charges a real estate sales commission just like the private treaty method most often used to sell real estate.  In addition to this, there is the out of pocket marketing expenses relating to marketing and promotion, as well as the conduct of the auction itself.  These fees can vary widely depending on the property being sold and a thorough budget proposal will be presented prior to listing.

11.  What are the advantages to the seller in an auction situation?

Buyers come prepared to buy.  "Lookers" are eliminated because most often bidders must qualify through the deposit of a check.  There is a sense of immediacy at auction.  Sellers get maximum exposure for their properties.  The auction marketing strategy differs from conventional advertising.  It is more concentrated over a shorter time and therefore more intense and visable.  High carrying costs are avoided.  Through auction, the seller is in control and knows, that if the reserve is set correctly, his/her property will sell on a certain day at a certain time and close usually within 30 days of the auction.  By selling quickly, the seller is able to avoid high carrying costs such as mortgage, insurance, real estate taxes, security and maintenance and is also able to benefit from the use of the money to reinvest in other real estate or investment opportunities elsewhere.