I have never purchased real estate at auction, how does the process work?
It’s important to do your due diligence and be prepared to bid before you show up at the auction. Other than the actual auction, which last only a few minutes, it’s just like any other real estate transaction – except you will be bidding on the property against other individuals, instead of haggling price with the seller.
You MUST register on or prior to auction day in order to bid. If you are the high bidder, then you will be required to sign an Earnest Money Contract (Purchase Agreement) and deposit the stipulated amount of escrow (Typically 5% or 10%) with the Title Company’s Escrow Officer.
How Are Real Estate Auctions Conducted? Most of our real estate auctions are conducted using the live auction format. As a bidder, all you need to do is hold up your bidder card or tell one of the Bidder Assistants what amount you want to bid. Our Bidder Assistants will be uniformed and located throughout the crowd to assist you in bidding or answer any questions you might have.
What Happens If I Become The Successful Bidder? You will be asked to move to the contract table where you will complete the Earnest Money Contract and remit your escrow deposit. Once you have completed the paperwork, our licensed and knowledgeable staff will discuss the closing timeline and answer any questions you might have.
Can I or my attorney review the purchase agreement prior to the auction? Absolutely. We will provide a copy of the Purchase Contract in the Property Information Package (PIP) for you and/or the review of your attorney and/or real estate broker. If you are unable to locate the PIP or a copy of the Purchase Contract feel free to contact our office at 254-965-4040.
Is the Earnest/Escrow Money Refundable? If a buyer does not close for any reason on or before the closing date or any agreed extension thereof (such as delays for surveys or closing documents), the initial deposit may be forfeited to the seller to offset the auction marketing expense in lieu of enforcing specific performance. Typically, sellers desire to close and will work with buyers for unforeseen circumstances that are out of the buyer’s control. Therefore, it is important for buyers to do all of their due diligence before ever bidding at the auction. In the unlikely event a seller is unable to close or provide clear and marketable title to a property then the buyers escrow money will be refunded.
Do I need to be represented by a licensed agent or broker? It is not necessary, but Alliance will gladly work with any buyer representative and co-operate commissions based on our co-brokerage guidelines. Alliance represents the interests of the seller in all auctions and cannot ethically represent a buyer or act as intermediary in an auction transaction.
Who is responsible for closing costs? Each auction is custom tailored to our seller’s needs. Many times the seller will provide an Owner’s Title Insurance Policy and Survey while paying property taxes through the day of closing. Each Property Information Contract (PIP) will include a Purchase Contract that will specify what closing costs each party is responsible for.
Are Auction Properties Contingent on Inspections/Financing? Alliance encourages sellers to provide a current home inspection for potential buyers to review. These comprehensive reports are included in the Property Information Package (PIP) for your review. The Purchase Contract will not provide for any inspection or repair contingencies. Additionally, buyers should be prepared to pay cash at closing or have their financing secured prior to bidding as the Purchase Agreement will not allow for financing contingencies. All of our sales are on an “as-is” basis. There are no warranties as to the condition and/or the fitness of the property for particular use.
When and Where Does Closing Take Place? Alliance recommends 30 Days for closing. However, some sellers and some situations require longer closing periods but rarely longer than 45 days. The actual closing will typically take place at the posted Title Company’s office or the Title Company may close by mail or mobile.