If a home is being auctioned off, does that mean it is in foreclosure? No. In fact Graystone doesn’t work with foreclosures. Auctions have been used for hundreds of years to sell fine art, jewelry, real estate, vehicles and more. It’s a timely and transparent way to sell personal and real property.
Why would someone auction their home and just not list it with a broker? Both can be good choices. In a traditional real estate transaction, a real estate agent has to decide on a listing price, too high and the home sits there, too low and money may be left on the table. There are also opportunity costs if the home sits on the market: continued expenses such as insurance, inconveniences to the property owner, utilities, gardening, upkeep, and negative market changes that can occur, mortgage payments, as well as the stigma of the home sitting too long on the market further driving down its appeal.
Using the auction method, sellers can pick a date they want their home sold. Marketing and information about the home are available upfront for potential buyers. On the day of the sale, all bidders are brought together in a transparent format where the current bid is on display and the bidder knows within a short time if they are the owner of their desired home. There’s never any wondering how you got outbid and how much more you could have offered.
Are buyers at a disadvantage of having to pay too much at an auction? As one real estate agent recently put it, “I am doing a behind the scenes auction which is not as transparent as what you are doing at the auction.” In a traditional sale, buyers are not able to see who else is putting in offers and what the offers are. The buyer must guess blindly as to how much more they would have to offer to beat out the other buyer or any other reason which caused them not to get the home.
In an auction, bidders know exactly where they stand in the process, can stop once they hit their limit of what they are willing to spend and won’t wonder why or how they got out bid and know that day if they are the new owner of the home they want.
Should I be concerned that the sale is final and there are no contingencies? Just like in a traditional R/E transaction, a deposit (made out to the trust/escrow company) is put down to secure their offer. In a conventional transaction, the buyer would get about 17 days to go through the inspection and 21 days to secure their financing. In hot markets or for prime real estate however, many buyers are having to forego inspections and contingencies to compete, which may run into issues down the road.
In Garystone’s Auction method, the auctioneer has a third party, independent inspector, do a home inspection, and in many cases also a termite inspection, upfront so he/she knows what they are selling, especially in an estate situation where there is no one to sign full disclosures. The auctioneer relies on these reports. This information is available for the potential buyer to review. The buyers are encouraged to do their own inspections if desired, however, the reports done will be available to view before the sale. On the day of the sale, a non-refundable deposit is required and made out to the title/escrow company. The auction method is for serious buyers, and it is stated clearly that no one should bid if they are not prepared to buy the home.
How quickly can I close and does the closing differ in the auction method from a conventional r/e sale? The home can close in as quickly as a week for cash buyers and usually thirty days where there is financing involved. The parties can agree to extend this if more time is needed. A clear and free title is given at the close of escrow which is no different from a conventional closing.
What if I am working with a real estate agent? We will work with your agent who will get their fee should you be the winning bid on the property. This relationship must be formally acknowledged before the auction using a simple form from the auction company. However, it is not necessary to have an agent as many people bid on their own.
Is the same CRE contract used in the auction purchase? No, the auction contract is much simpler and faster. It is essentially a contract between the buyer and the seller facilitated by the auction company.
What if I don’t have my financing prepared? The potential buyer needs to be able to show proof of funds if paying cash or proof of being approved for a suitable loan amount prior to bidding.
What if I have more questions? Please feel free to visit our website, GraystoneAuctions.com, to review details about the property and to review testimonials. We are also available by phone and will look forward to answering your questions. Please call 408-637-1587.