Types of Real Estate Auctions

By
Services for Real Estate Pros with United Country - Beloit Auction & Realty Inc.


There has been a boom in the real estate market, but not the type of boom that most people have expected. This boom has been due to real estate auctions and not traditional real estate sales. Real estate auctions are essentially what they sound like. A seller needs or wants to get rid of their home, but instead of putting it on the market like a traditional sale, they will contact a real estate company that specializes in auctions or contact an auction company in the area that specializes in real estate auctions. The home will be put up for auction and buyers will bid on the auction up to a certain time or date. There are three different types of real estate auctions.

The first type of real estate auction is known as an absolute auction. In an absolute auction, the property in question will be sold to the highest bidder, no matter what the price. There is not a reserve in this type of auction and the sale is guaranteed at any price. Excitement is always high for these types of auctions since really, anything can happen. An absolute auction usually will get maximum advertising on the market and it has, in recent years, become a very popular way to auction off homes.

Another type of real estate auction is known as a minimum bid auction. This type of auction is where there will be a published minimum bid, so only bids above that amount will be accepted. There will be printed materials that will be passed out to potential buyers with this price listed. In this type of auction, the buyer will know the minimum price and the seller will know that they will at least secure the minimum price for the auction. This is a reduced risk auction for the seller, which makes these types of auctions much more popular for those wishing to sell their homes at auction. It should be noted, however, that minimum bid auctions can turn many bidders away, so sellers should consider if this is the route they want to go before settling on this auction type.

The third type of auction is known as a reserve auction. In this case, there is no minimum bid that is published and the seller has the right to accept or reject the highest bid that is given, but it must be in a specified time frame, such as 72 hours after the auction closes. The other part of the reserve auction is the reserve price, itself. In this scenario, the seller will set a reserve price, which is the minimum they are willing to accept for the sale of the home. If the reserve is not met by bidders, they are not obligated to accept the price. If the price goes above the reserve, they must accept, though they can also accept, if they choose, a price under the reserve. Buyers tend to shy away from reserve auctions as they aren’t always the easiest or advantageous auction types for buyers.

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Winston Heverly 05/06/2012 09:49 PM
Topic:
ActiveRain Community
Location:
Wisconsin Rock County Beloit Beloit
Tags:
beloit wisonsin real estate auctions illinois real estate auctioneers houses ranches bank owned janesville clinton sellers buyers

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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Selling Daytona paradise for heavenly good prices

Rich - excellent blog post. There is one concern though: I see it on the internet at http://beloitauction.wordpress.com/2012/03/18/types-of-real-estate-auctions/

So, who wrote it?

Mar 17, 2012 08:56 PM #1
Rainmaker
848,688
Winston Heverly
Winston Realty, Inc. - Atlantis, FL
GRI, ABR, SFR, CDPE, CIAS, PA

I find on-line auctions an incredible risk with not much upside, especially when you can't view the property until after you bought. To me it's just another hype marketing attempt to unload a property and receive more revenue. Sorry that's just one person's opinion based on what I've witnessed.

Mar 17, 2012 09:29 PM #2
Rainmaker
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Sharon Parisi
Keller Williams Dallas Premier Realty - Dallas, TX
Dallas Homes

Rich thanks for this very educational post.  I am certain there are many readers out there who will find you information in cyberspace as they are researching auctions!

Mar 17, 2012 09:46 PM #3
Rainer
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Rich Ranft
United Country - Beloit Auction & Realty Inc. - Beloit, WI
CAI, GPPA, AARE

Winston.....Maybe it's just because you have never been to an honest to goodness real estate auction...I don't know of any reputable auction services that don't allow viewing if you want. Auctions dont devalue property they realign the market.

Mar 18, 2012 06:08 AM #4
Rainer
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Rich Ranft
United Country - Beloit Auction & Realty Inc. - Beloit, WI
CAI, GPPA, AARE

Jon... Our staff put this together and I edited it...

Mar 18, 2012 06:11 AM #5
Rainer
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Rich Ranft
United Country - Beloit Auction & Realty Inc. - Beloit, WI
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Sharon .. Thanks... Rich

Mar 18, 2012 06:11 AM #6
Rainmaker
1,432,864
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

I have used the minium bid auctions for years and have had minium success but find them to be glorifiedopen houses and the do get vistors so the sellers enjoy that. Good post loved the read

Mar 18, 2012 06:46 AM #7
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Selling Daytona paradise for heavenly good prices

Rich - Oh, I see.

I have seen a combination of a minium bid and the reserve, where they even tell you the reserve amount, but still the auction can start at lower amount, and if it does not reach the reserve, the Seller can still agree to sell to the highest bidder

Mar 18, 2012 01:40 PM #8
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Rich Ranft

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