(615) 563-2380 phone  (615) 653-0080 direct

F.A.Qs

At Leo Parker Real Estate and Auction, we've done our best to create a Web presence that anticipates and satisfies our customers' needs. With that goal in mind, we've compiled a list of frequently asked questions. If you do not find an answer to your question here, call or send an e-mail.

Frequently Asked Questions

Selling @ Auction

Q. Why should I sell my property using the auction method?
A. To sell your property quickly, and to receive a non-contingent contract usually with a 30-day settlement.

Q. What types of assets do you auction?
A. We auction all types of real estate from condominiums, co-ops, town homes, single-family homes, land, ranches, commercial & investment properties, and high-end trophy properties. Additionally, LP auctions financial notes, equipment, wireless spectrum, memorabilia, and much more.

Q. My Listing Associate has had no previous experience with auctions. Will this impact my results?
A. No. Our auction staff is composed of a group of specialists that deal with this situation daily. We give your Listing Associate a training packet after your property is registered, and we work with your Listing Associate throughout the entire process. Ultimately the Auctioneer manages the auction process and monitors the Listing Associate.

Q. Do I have to sell my property to the highest bidder?
A. The surest way to affect a sale is to auction the property "absolute bid". An absolute sale is the strongest signal a seller can send to the marketplace. It attracts purchasers from the broadest geographic region because buyers can justify their time and efforts to inspect, bid, and buy, knowing there is no question the property will be sold. However, most properties are sold with a reserve or subject to seller confirmation.

Q. How is the property marketed?
A. A marketing plan is developed by the Auctioneer subject to the seller's approval. The seller's asset can be featured in the LP catalog, direct mail pieces, regional and targeted advertisements, the LP website, and other marketing avenues.

Q. Does "As Is" mean I don't need to disclose any known defects?
A. Though we are selling "As Is", we must abide by all applicable state and federal laws (including inspection and disclosure regulations) relating to the type of asset transaction we are conducting.

Q. What if the property is priced below the market right now?
A. Often times we find that the price is not the reason why a property doesn't sell. The primary cause often is it has not been marketed effectively and, therefore, the property has experienced insufficient exposure. In other words, it has become "stale''. The auction process is the best way to revive interest in the property and obtain offers at current market value.

Q. I am not in financial trouble, should I be concerned about what people might think if I hold an auction?
A. You are not alone in your concerns. Many people are afraid of the old, outdated perception of auctions some people have. There are great differences in the marketing of a voluntary, "by choice" auction such as ours versus a distress auction. Our auctions are positive, enthusiastic events designed to generate competitive bidding, providing immediate results for both seller and buyer.

Q. I am concerned about the net amount I'll receive from the auction because I have a mortgage. What advice do you have to offer on this?
A. LP will help you decide if the auction process is best for you. We understand your concerns and your need to cover an existing mortgage on your property. On auction day, the market will determine what value is acceptable for your property. The fact you are doing an auction does not change what the market value of your property is. In short, if the true market value is at a level below your existing mortgage, then that is the price you have to work with regardless of whether you use the traditional method or auction method.

Q. Where will the auction be held?
A. We hold all auctions on site or in a ballroom setting, depending on the needs of the seller and the concentration of assets.




Buying @ Auction  
Q: I've never bought real estate at an auction; how does the process work?
A: Buying real estate at auction is a very simple process. However, it is important for you to be informed and prepared prior to auction day. You should inspect the property during one of the scheduled preview dates.

Q: What are the advantages of buying real estate at auction?
A: Buying real estate at auction allows you to experience a quick purchase and closing, eliminates lengthly negotiations, and provides the assurance the price paid was market value.

Q: Why are properties sold at auction?
A: Owners make a wise business decision to sell property in a one-day sale rather than continuing to incur carrying costs and negotiating in a manner associated with conventional marketing. Sellers are motivated to sell and offer you an opportunity to purchase desirable property at a substantial discount. Over 90% pf properties offered are sold at their auctions.

Q: How are auctions conducted?
A: Most auctions are conducted by open bidding. As a bidder, all you need to do is hold up your bidder card and call out your bid, or tell one of the Bidder Assistants what amount you want to bid. The Bidder Assistants are there to help you.

Q: Do I need to be represented by a Real Estate Broker in order to buy at the auction?
A: No. We do encourage buyer-broker participation; however, it is not a requirement.

Q: Is financing available?
A: Some auctions have financing available while others do not. See the information listed in your specific Auction Catalog to determine this.

Q: What is required in order to bid at an auction?
A: You MUST register with a valid ID (Driver’s License) on auction day and receive a Bidder Card in order to bid.   If you are the highest bidder for a property you will be required to make an earnest money deposit on auction day.

Q: Can I buy more than one property?
A: Yes. You just need to bring and present a separate Check for each property you intend to purchase.

Q: What does "Absolute Auction" mean?
A: Real Estate being sold "Absolute" means the property will be sold to the highest bidder, regardless of the high bid price.

Q: What do the terms reserve and absolute mean?
A: An auction where the property is being sold with a reserve means that the property is being sold subject to seller confirmation. When a property is being sold absolute it will be sold to the highest bidder regardless of price.

Q: Do I have to make any more deposits other than my initial deposit before closing?
A: Usually you must increase your initial deposit to a total of 10% of the purchase price upon execution of the contract, which takes place at the auction. You may pay this additional amount by personal or company check.

Q: What happens once I have become the successful high bidder?
A: You will move to the contract table where you will present your check and complete the Purchase and Sale Agreement.

Q: What is a Buyer's Premium?
A Buyer's Premium is a percentage amount paid by the buyer and added to the highest successful bid to determine the final contract price. If a bid is being utilized, it will be detailed in the auction catalog.

Q: To whom do I talk to if I don't understand the auction contract?
A: It is very important for auction buyers to be educated and informed regarding the auction process. Make sure all your questions and concerns are answered before you attend an auction. The contract is available by contacting LP. Feel free to have your legal advisor review the contract prior to the sale.

Q: Is my deposit refundable if I change my mind after the sale and decide not to buy the property?
A: No. If a buyer does not close for any reason on or before the closing date, the initial deposit may be forfeited.

Q: When and where are closings held?
A: Closings generally occur from within 30-40 days after an auction. Since the seller typically pays for title insurance, a company has been selected and will be provided to you in the contract room.




Resources  

Q: What is a Real Estate Auction?
A: A real estate auction is an innovative and effective method of selling real estate. It is an intense, accelerated real estate marketing process that involves the public sale of any property -- most certainly including those that are non-distressed - through open cry, competitive bidding.

Q: I've never been to an auction- what do I do?
A: Decide which assets you are interested in and determine how much you are willing to pay for each of those assets. You must obtain a bidder number by registering prior to the auction. To register you must show a picture I.D, and proof of your certified funds. The certified funds usually are $2,500 in the form of a cashier's check, but see your specific Auction Catalog for details on this registration item. Pay close attention to the auctioneer. As the assets are being auctioned, simply raise your bid card for the auctioneer to see. If you are not sure you are in or out, or the high bidder, simply raise your bid card again. The auctioneer will not let you bid against yourself. Be aware once you are the successful bidder you will enter into a contract and will be expected to pay for the asset for sale. All sales are final.

Q: What is the asking price for properties?
LP auctions are conducted with the open bidding system. There is no beginning asking price. A starting bid comes from qualified bidders who are attending the auction.

Q: How will an auction benefit me?
A: The real estate auction is a win-win proposition for everyone involved. Immediate action and quick closings on quality assets at a fair, market-driven price.

Q: Can I make an inspection of the auction properties prior to the auction?
A: Yes. We strongly encourage you to view the property as you will be purchasing it "As Is, Where Is." In most instances, you may contact the broker listed in the brochure to arrange a viewing. However, properties that remain occupied by prior owners/tenants may not be shown. Vacant improved properties will be shown per our showing schedule. Vacant land properties may be viewed anytime without supervision.

Q: What do the terms Reserve and Absolute mean?
A: An auction where the property is being sold with a reserve means that the property is being sold subject to seller confirmation. When a property is being sold absolute it will be sold to the highest bidder regardless of price.

Q: What is a buyer's premium?
A: A buyer's premium is an amount of money, usually a percentage added to the bid price to determine the total purchase price. If a buyer's premium is being used, it will be detailed in the auction catalog.

Q: How long do I have to get financing after the auction?
A: We suggest, if financing is required to complete a purchase, you arrange and pre-qualify with a lender prior to the auction date. Basically, if you fail to pay the balance due by the closing date, you may forfeit your deposit.

 Q: As a purchaser of a tax delinquent property will I be responsible to repay the municipality the past due taxes?
A: No. As a general rule on real estate, the seller is providing a title policy, and delinquent taxes will be paid at closing.

Q: How do I get on your mailing list?
A: Just register through the website and indicate which states you are interested in selling and/or buying assets in. When we have an upcoming auction in your area, a brochure will be mailed to you.

Q: When can I move into and/or start work on the property?
A: Legally you do not own the property until the closing has taken place, and the seller has signed the deed over to you.

Q: What happens if I cannot come up with the balance of the money for the closing?
A: If you fail to pay the balance due by the closing date, you may forfeit your deposit.

Q: What happens if an improved property I purchase is damaged between the date of the auction and the time that I close on the property?
A: Generally, the seller is responsible for the property until it is closed.

Q. What happens to the properties that do not sell at the auction?
A: Generally we sell all of the properties at LP auction. The reason for this is our sellers are highly motivated. If we have any properties we do not receive bids on, those properties are available for sale immediately following the auction by contacting the LP office.

Q: What do you mean by “At Auction”?
A: This is a commonly used method of selling property that is subject to the Seller’s Confirmation or Auction with Reserve. In other words, the seller or his agent has the right to establish a minimum bid, to accept, reject any and all bids, and to withdraw the property at any time prior to the completion of the sale by the auctioneer. At no time is a specified price or minimum bid requirement disclosed or advertised. This method has worked well in many cases although it is not recommended for certain situations. The disadvantage: Bidder turn out is less likely to be as strong due to the uncertainty of how motivated and realistic the seller is. The LP Auctioneer can best advise you as to which method(s) would most likely work the best. Remember, once an offer is changed, that re-opens the terms and conditions such as, subject to financing, subject to inspections, different closing dates and more. These conditions put the closing at a much greater risk.

Q: What’s an Absolute Auction?
A: This is a sale that is Guaranteed to be Accepted by the Seller at the Highest Bid. Once the Auctioneer calls for the first bid, the sale becomes Absolute. These types of sales generate great turn-outs as the buyers know the property is going to sell. This type of sale can make the seller a bit nervous for obvious reasons. It can also be a huge pay-off in many cases due to competitive bidding and predictable closing dates.

Q: What’s a Minimum Bid Auction?
A: This method can be extremely effective and offers a cross between the Public Auction and the Absolute Auction. With this approach, we utilize the drawing power of the Absolute Auction by advertising a Minimum Price of Which the Seller will Accept. In order to be effective, the minimum price advertised must appear to be a "good buy" and very enticing. The object is to attract buyers to the sale with the low minimum price. Competitive bidding then drives the price. If the minimum bid is too high it will scare buyers away. This is a sale with a disclosed reserve.

Q: What are Sealed Bid Sales?
A: This type of sale is really not an auction but is useful in certain situations. It is sometimes used with a major commercial property where finding the best purchaser may be difficult. This is known as a Thin Market. The bidding takes place over a specified amount of time with an ending date and time. The bids are then opened and the merits of each one discussed. The terms can be advertised or disclosed to registered purchasers. As with all sales, they should be discussed with the LP Auctioneer up front. The consultation is free.

Q: How are auction properties advertised?
A: Because the lead time in a real estate auction is generally short, the marketing program must be comprehensive, intense, and targeted to prospective buyers. A specific advertising budget is established to properly expose the property to the marketplace. Most of our auction marketing programs will include direct mail advertising (from a postcard to a full-color brochure), print advertising (local, regional, and/or national newspapers, magazines, trade journals, etc.), and signage (our attractive, attention-getting LP signs posted on or about the premises). Additionally, platforms and techniques such as telemarketing, publicity, radio and TV can be utilized. Billboards may also be used to enhance market exposure if indicated.

Q: How much does advertising or marketing cost and who pays for it?
A: Depending on geographical location, the value of the property, and size of the marketing area (local, regional, or national), advertising budgets can run from one to four percent of estimated proceeds. While the LP Auction Team  prepares, coordinates, and places all advertising, the advertising expense is generally the responsibility of the seller and is usually paid to the auction company at the signing of the auction contract.

Q: How long does it take to market the property, have the auction, and close the sale?
A: The timeframe varies, depending on the type of property auctioned. Generally, however, the process takes from 4 to 10 weeks from listing to sale day. Sellers usually allow buyers an additional 30 to 60 days for closing.

Q: What are the expenses related to an auction?
A: In general, auction expenses include the auction company’s commission, marketing and advertising, and co-brokerage commissions  (if utilized). Typically, the auction company charges a commission as a percentage of the sale price. This commission is negotiable. In addition, marketing and advertising costs are usually paid by the seller and are payable upon signing of the auction contract. A complete marketing proposal will be provided for the seller’s approval prior to signing. The seller usually pays the co-brokerage commission, either a flat fee or percentage of the sale price. We recommend a percentage as outlined below for maximum bid participation.

Q: What is co-brokerage or broker participation?
A: More and more buyers of real estate have a Buyer’s Representative (a licensed real estate agent and brokerage firm that is a designated representative of the buyer). We recommend attracting any and all buyers and advocate co-brokerage/broker participation. In order for the Buyer’s Representative to  be compensated, they must adhere strictly to the following:  1. Register the buyer 48 hours in advance. 2. Register as the buyer’s agent the day of auction. 3. Show the property prior to the sale 4. Attend the auction. 5. Give opening bid, and 6. Get paid if there is a successful closing. Rate of commission for Buyer’s Agent: 2% of opening bid, 1% of remainder. If Buyer’s Agent/Buyer does not give opening bid, then all other stipulations apply and the Buyer’s Representative shall receive 1% of final sale price only.

Q: What is meant by Bidder’s Choice?
A: This is a method of sale whereby the successful high bidder wins the right to choose a property or properties from a grouping of similar or like-kind properties. After the high bidder's selection, the property is deleted from the group, and the second round of bidding commences, with the high bidder in round two choosing a property, which is then deleted from the group and so on, until all properties are sold. This type of bidding is very popular when selling building lots, condominiums, or timeshares.

Q: What do you mean by Internet Auction?
A: A live Internet auction is where internet bidders are competing with bidders who are present at the auction location. This method has proven to be excellent for both buyers and sellers due to having a professional auctioneer facilitate the sale. The main benefit is they allow for a qualified bidder who has already researched the property to participate in the live event, no matter where they are located. Bidders must be registered and meet the same deposit and other financial qualifications as live bidders. The bidding is conducted in real time and creates a higher level of excitement for everyone involved.

Please contact us at 615-563-2380 to see how we can help you. You may also register for our mailing list and keep informed to the latest auctions in your area of interest.

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