1. What is a real estate auction?

A Real Estate Auction is a method of buying and selling real estate. It is an intense and accelerated real estate marketing process that involves the public sale of property through open, competitive bidding.

2. What is an absolute auction?

An absolute auction is a public auction without a reserve or minimum. This means that the property, once the auction begins, will be sold that day to the highest bidder regardless of price. This method is the most effective method and has the highest impact of success for the seller. Traditionally, absolute auctions get 10-20% higher prices than traditional sales. More bidders register and bid at these auctions. More bidders equal more competition means higher price for the seller. South Carolina law and the National Association of Realtors have adopted strict guidelines and rules for advertising absolute auctions.

3. What is an auction with reserve?

A typical “auction” will usually have a reserve unless it is an “absolute auction”. A reserve means that there is a minimum price amount set that the seller will sell for. There are many variations of the reserve auction. - Disclosed Reserve: the seller will sell to the highest bidder over the published reserve amount. - Seller Confirmation: the seller has reserved the right to accept or reject the high bid. The seller doesn’t have a specific minimum number because he is willing to consider the lowest reasonable offer. Remember, the seller wants to sell and has probably invested money into the advertising campaign. - Opening Bid: different than the disclosed reserve because it is non-binding to the seller. It is merely a place to start the bidding at.

4. What is the Buyer's Premium?

The buyer's premium is a service charge that is added to the high bid to arrive at the contract sales price that is recorded at the county courthouse. It is an industry standard fee charged to the buyer.

5. What are the advantages to a seller in an auction?

There are 5 main advantages to a seller by having GRAND SOUTH AUCTIONS sell your property for you at auction:

•Sell your property "as-is" for cash – immediate use of your money
•Pay NO real estate commissions
•Build a price; don’t start at a list price and work down
•No financing contingencies
•Close in 30-45 days from the date of the auction – a predictable closing date.

 "Lookers" are eliminated because most often bidders must qualify through a deposit of a certified or cashier's check. Auction brings interested buyers to a point of decision. Buyers feel that if all the properties are sold before the auction ends it represents their last chance to purchase a desired property. Sellers get maximum exposure for their properties. The auction marketing strategy differs from conventional advertising. It is more concentrated, therefore more intense and visible. High carrying costs are avoided. Through auctions, the seller is in control and knows that if properly priced, his property will sell on a certain date, which is usually within 30-60 days of signing the service contract. By selling quickly, the seller is able to avoid high carrying costs such as insurance, real estate taxes, security and maintenance and is also able to benefit from the use of the monies to reinvest in other real estate or investment opportunities elsewhere.

Other benefits are:

•Offers the seller another option.
•Creates competition among buyers - auction price can exceed the price of a negotiated sale. An auction generates excitement and heightens buyer interest.
•Accelerates sales - the property can sometimes be sold within six weeks of listing.
•Auction is a true market forum - the highest buyer pays the lowest price a seller will accept.
•A seller knows exactly when the property will sell.
•A seller sets the terms and conditions of the sale, maintains control of the property throughout the auction (depending on auction type), and actively participates in the sale process.
•Auction reduces the time the property is on the market.
•Auction eliminates numerous and unscheduled showings.
•Auction takes the seller out of the negotiation process.
•Auction is an aggressive marketing program that increases potential interest in and awareness of a property.
•Gets your property noticed – it freezes the market around you!

6. What do you think my property will sell for?

If I knew that, I'd be in Vegas OR playing the stock market! The only genuine measure of value of real estate is what a willing and able buyer 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. We do not know what dollar amount your property will sell for but we know it will sell for “fair market value’”. Through our extensive advertising and marketing campaign, rest assured, your property will be showcased to every potential buyer in the marketplace.

7. What expenses am I responsible for?

Adverting is the only cost to our sellers. (NOTE: This upfront fee is completely reimbursed to the seller at closing.) When a seller signs our service contract there is a pre-determined advertising fee. The amount of the fee depends on the size of the property and the size of the necessary advertising campaign. In an Absolute Auction, we do not charge the seller any upfront expense fees! We have different plans available, call us to determine which is right for your needs. Our plans at GRAND SOUTH AUCTIONS start at $500.

8. Why would a seller spend up front money to market their property?

In the accelerated marketing method of selling via the auction, most auction companies require the seller to pay for some or all of the upfront advertising expense of the campaign. This is necessary because (1) the auction is a date-drive sales event, we have a limited time to get maximum exposure of the property; (2) sellers usually have the right to accept or reject the high bid, most auction companies do not want to be out of pocket for expenses for the seller’s decision not to sell; (3) in an auction sale, the vested interest of the seller in the process is vital – one way to have vested interest is paying for up front marketing expenses.

9. Are auctions for “fire sales” and distressed properties only?

NO! The majority of auctions today do not result from foreclosure or a distressed situation, but rather are the choice of a seller choosing an alternative, aggressive accelerated marketing system. Builders and financial institutions prefer the auction method rather than laboring for months or years to sell out their inventory. The real estate auction is definitely a win-win proposition for everyone involved. The seller disposes of properties quickly and efficiently, thereby saving long-term carrying costs such as interest, real estate taxes and maintenance. For the buyer 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 property's true market value emerge as the bidding process progresses. For both buyer and seller, fair market values for the property prevail. An auction creates competition among buyers and exposes the property to a large number of pre-qualified prospects. Because it is an accelerated sale, property can often be sold within 6 weeks of listing. For the agent, auctions can mean an increased client and customer base as well as increased profits.

10. What factors determine the success of an auction?

A.The desirability of the property being sold. This includes location, condition and surrounding properties.
B.An aggressive marketing and advertising plan geared to prospective purchasers.
C.Realistic expectations on the part of the seller.
D.Selecting the type of auction that best suits the property and the seller's needs.
E.Conducting the auction in a professional manner and following up through closing.
F.Undertaking due diligence ahead of time so buyers are knowledgeable and the only issue that remains is price.

11. Are all properties suitable for auction?

Most properties, but certainly not all, are saleable by auction. Residential property (including town homes, condominiums and single-family homes), commercial property, farmland, timberland, 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 perhaps has been on the market too long, causing prospective buyers to consider it "tainted." Perhaps the project itself was poorly constructed or planned. These types of properties don't do well at an auction and most reputable auction marketing companies would not accept them.One method used by auction firms to analyze the market, property and seller situations is the two-thirds rule. A general explanation of the rule is that if two out of three parts (market, property, seller) lean favorably toward auction, then auction should be offered to a seller as a sales option.

12. What if my property doesn’t sell at auction?

There are several options available to you if the property does not sell at auction. The 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 our agreement, we will continue to advertise the property for sale. If we do not have that exclusive agreement we typically charge a “no sale” which covers the labor and energy of the auctioneer and staff. In our experience, there is only one reason that a property does not sell at auction and that is when a seller is greedy or unrealistic about the market value of their property.

13. Can you sell my property before the auction?

YES! You are the seller, you set the terms. You set the conditions. Many times, when buyers see that a property is up for sale via auction they will want to beat other potential buyers to get in an offer. We do offer REALTORS who have a buyer a bonus commission if they bring an offer before the auction event.

14. 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.

15. Who usually buys at real estate auctions?

Anyone can benefit from buying at a real estate auction. Many people who buy are first-time homebuyers who may otherwise be shut our of the real estate market. For them, the auction is a realization of a dream. Empty nesters and investors also comprise a large segment of the auction buying public.

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

The buyer knows the seller is fully committed to sell. Auction agreements obligate the seller to transfer title to the highest bidder in an absolute auction; 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. The buyer knows he is getting the property at a fair market price. The buyer feels comfortable with the purchase knowing that there is a contending bid just one increment under the purchase price. The buyer has negotiating power. The buyer can withdraw from the bidding at any time until the gavel falls. The buyer sees many offerings in the same place at the same time. He is able to make market comparisons quickly and easily.
Other benefits are:
•Buyers set their own purchase price.
•Auctions eliminate sometimes long negotiation periods.
•Auctions reduce time to purchase property.
•Buyers do not have to worry about contingencies because purchasing and closing dates are known.
•Buyers know property owners sell at lowest price possible.
•Buyers can receive favorable financing.

17. Do you work with REALTORS?

YES, We are REALTORS and we encourage agent cooperation. Increasingly, real estate agents are discovering the benefits of real estate auctions. They are realizing that auctions promote activity in an industry that thrives on activity. Agents can get involved in auctions themselves. If an agent brings a buyer to an auction, and that buyer purchases property, the agent can receive a commission. To ascertain the amount and structure of any commissions to be offered, refer to the particular terms and conditions of the auction contract. A single auction for one development might bring in dozens or even hundreds of prospective buyers who are now in the real estate agent's market area.

Other reasons:
•Provides a list of ready and qualified buyers.
•Offers clients and customers new selling and purchasing options. •Increases market share and revenue - new business opportunities are added.
•Enhances company's image.
•Develops your own market niche - able to offer new products and services other agents aren't providing.
•Exposes the property to many potential purchasers.
•Auctions appeal to people - it brings them in to look at all the listings you hold, not just the auction listing.
•Auctions cause referral and return business.
•Builds rapport with auction firms.
•Agents don't have to be auctioneers to earn commissions -
•Earn referral fees as referring agent/broker
•Work as cooperating agent/broker
•Work as listing agent/broker.

18. Do you have to be a licensed Auctioneer to hold an “auction”?

In the State of South Carolina, YES unless you are the property owner, a government agency, or a court appointed representative for the party/estate. The SC LLR, the SC Auctioneers Commission, and the National Association of Realtors have strict rules and guidelines conducting auctions. Penalties can be monetary and loss of licensure. Advertising and using the “auction” can be misleading to the buying public if you are not a licensed professional and could possibly expose you to a risk of lawsuit.