Talking Points: Auctions
REALTORS® add value to the real estate transaction with their expertise in managing complex real estate transactions, and auctions are no exception. REALTORS® work with both buyers and sellers in auction sales.
Real estate professionals provide property referrals and may register, assist and accompany potential buyers to the auction sale.
Listing brokers often assist auction companies by holding open houses, providing inspection reports and photographs, and placing signs. Agents or brokers who assist auction companies may earn a commission when the sale closes, depending on the agreement with the auction firm.
All types of property can be sold at auction. For sellers, auctions mean immediate cash and no long-term carrying costs. For buyers, auctions can save time and money.
More real estate is sold by auction every year, as both buyers and sellers believe the process is fair and quick. A listing can typically sell within 9-12 minutes.
Real estate auctions – for residential, commercial and agricultural real estate – continue to be one of the fastest growing sectors of the overall auction market, generating $58.4 billion in 2007 according to the National Auctioneers Association. NAA also reports that the residential real estate auction sector alone generated about $17 billion last year – up 5.3 percent from 2006. These figures are especially impressive given the slowing housing market last year.
Auctions may be conducted online.
Online auctions work very much like traditional auctions. They rely on listings and referrals from real estate companies and real estate brokers to accept and verify bidder deposits, write and close the contracts, conduct open houses and assist with up-front due diligence. Brokers earn a commission for the services they perform.
Successful auctions, whether online or not, require well-informed buyers, strong publicity, an adequate period to view the property and a full explanation of the sale terms.
Often, auctions involve properties located in changing or weak market areas. Properties that are unique or difficult to appraise also are good candidates for auction. Sellers pay fees that vary depending on the type and amount of properties sold.
The National Association of REALTORS® supports state laws that require those who auction real estate to either hold a real estate license or conduct sales in conjunction with a real estate licensee.
All 50 states require that real estate transactions be handled by a licensed real estate professional. In addition, 29 states require that auctioneers must meet the licensing requirements for real estate professionals to handle all aspects of a real estate sale.
Updated May 9, 2008
