Col. Rodger Paisley Auctioneer
PAISLEY AUCTIONS
Auctioneers, Appraisers, Liquidators
Chester County Pennsylvania Auctioneers
Located in Downingtown, PA 19335   License AY001979

"Professional, Timely Liquidation Of Assets"

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Buying Real Estate At Auction 
Frequently Asked Questions From Buyers

1. What types of properties sell at auction?
All types, from vacant land to building lots, single-family homes, multi-family homes, commercial buildings, condos, townhouses, subdivisions, and industrial buildings.

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2. Is it possible to get a bargain at auction?
Absolutely. You can get great value by buying at just one bid over the next interested party. However, keep in mind a “bargain” is like beauty — it is in the eye of the beholder. One person might say “That guy is nuts to pay $800,000 for that big chunk of ground,” while the buyer is thinking “I just got a bargain at $800,000, I'm going to subdivide it and develop it for a nice profit.” Just don't be fooled by those late-night television shows and websites promising you can make a million dollars buying property dirt cheap. It might be possible to buy a skyscraper for $1, but read the fine print — you will probably have to tear it down and remove it by the end of the week!

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3. I have never attended a real estate auction before. What should I do?
If you are interested in buying real estate at a one of our auctions, the first thing we recommend is to read through these Frequently Asked Questions to familiarize yourself with the terminology and procedures of real estate auctions. We also suggest you subscribe to our email list so you will receive notifications about upcoming real estate auctions.  Once you find a property of interest, follow this checklist to ensure you are fully prepared to participate: (1) Access the listing on the Upcoming Auctions page and download the property information packet; (2) Review the terms & conditions of the auction; (3) Do your due diligence on the property; (4) Preview the property; (5) Call your lender and pre-qualify; (6) Check out the values in the neighborhood and set a range of value or limit for your bidding; (7) Be prepared to bid to your limit; (8) Arrive early at the auction site to register to bid and get to know the auction staff; (9) Ask questions about properties of interest prior to bidding; (10) Get comfortable and relaxed; (11) Listen closely to the auctioneer. (12) Determine what the property is worth to you and bid confidently to obtain it. (13) Once you are successful, sign all the required documents, and your will be on your way to closing.

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4. What do you mean by “due diligence”?
PaisleyAuctions will provide you with the information available from the seller on each property, and the seller will provide insurable title, free of adverse liens by closing. However, it is your responsibility to verify that all information is accurate and to your satisfaction. For instance, you might want to check with the local municipality to verify taxes and zoning, and get the most updated copy of the deed or tax map. You also might want to walk the property itself to examine the “lay of the land,” and have professional inspections done on any structures. Typically, you are buying the property as-is, without contingencies; therefore, you should do your homework prior to bidding.

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5. What do you mean by “insurable title”?
If a NC title insurance company will insure the property at closing, you have completed your obligation to the buyer. All our property auction offerings are sold with good, insurable titles and no liens, judgments, mortgages or back taxes. If the title cannot be cleared, the down payment is refunded to the buyer.

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6. What are “previews”?
Previews are basically property showings of real estate to be auctioned. It is strongly recommended that all buyers preview before bidding. We also encourage you to use the opportunity to bring your contractor, home inspector or buyer’s broker with you for an inspection.

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7. Why do I need to register, and what is involved in the process?
Registration is a process of identifying yourself in our system as a potential buyer. If you want to participate in one of our auctions you will need to provide some form of positive ID such as a driver’s license. You will also need to sign the terms & conditions, and provide the stated down payment amount in guaranteed funds. You will receive a Property Information Packet (PIP) containing your numbered bid card, copies of the terms & conditions, a bid acknowledgment form, a purchase & sale agreement, a Pennsylvania agency disclosure form and the property information. Once you have registered, you will be eligible to bid on your specific property of interest.

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8. I have not seen a real estate auction before. Can I come to an auction just to watch?
Absolutely, we encourage anyone to attend and watch the bidding. You will be entertained and amazed at the process. Best of all, it's free.

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9. Are there different kinds of real estate auctions?
Yes, auctions can be "absolute," "subject to confirmation," with “reserve," or with a "stated minimum."

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10. What does “absolute auction” mean?
A property that is sold at absolute auction means that it is selling to the highest registered bidder regardless of price. There is no minimum, and the seller cannot reject the highest bid attained at the auction. 

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11. What does “subject to confirmation” mean?
It means that the property is being offered to the highest bidder, subject to the seller accepting or rejecting the bid.

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12. What is a “reserve” auction?
It is similar to the “subject to confirmation” auction, except that there is an undisclosed reserve dollar amount set by the seller. The property cannot be sold unless the bidding meets or exceeds the reserve.

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13. If a seller has a reserve, why don't they tell us the reserve, instead of wasting our time?
PaisleyAuctions is only interested in representing motivated sellers willing to consider that their own idea of market value may not be the same as the true market value achieved at auction. By not publicizing a reserve, the seller can be flexible if the auction price falls below it. For example, a seller sets a reserve of $100,000 on his home because his neighbor's home sold for $110,000. This reserve is his best guess of what he believes the market will bring. On the day of the auction, the seller witnesses 25 registered bidders competing to drive the bidding to $96,600, a few thousand dollars short of the reserve. The seller has purchased another home and is very motivated to sell the one he is auctioning. As a result, he accepts that the $96,600 bid is the true market value of the property and moves forward with the sale. If he had instead printed “minimum bid $100,000” on his marketing materials, no one would have come to the auction, and he would not have had the opportunity to review and accept the top offer.

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14. What is a “stated minimum bid” auction?
It is an auction at which the seller announces the minimum bid before the auction starts and will sell the property once that bid is reached or exceeded. For example, if a property “shall sell at absolute auction at or above a minimum of $41,237," if anyone bids $41,237 or more, the property will sell.

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15. What is a buyer’s premium?
A buyer’s premium is that portion of the commission paid by the buyer. It is usually a percentage of the bid price. The total sale price includes the high bid amount plus the buyer’s premium. For example, if a property sells for $100,000 and the buyer’s premium is 10%, the buyer will pay a total sale price of $110,000. At closing, the seller will receive $100,000 and Absolute Auctions will receive $10,000.

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16. Do I have to attend an auction to bid on a property?
There are several ways that you can participate without attending: (1) You may send someone to whom you have granted limited power of attorney so they may bid on your behalf (consult your attorney); (2) You may bid by utilizing an absentee bid form. This form must be include your complete registration information and be accompanied by the proper down payment, signed terms & conditions, and a signed purchase & sale agreement which includes the total bid offer; (3) You may register for phone or Internet bidding (when available), provided you agree to and abide by all of the terms and conditions. If you are interested in either phone or online bidding at a particular real estate auction, contact us at least 5 days in advance, and we will discuss the details with you.

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17. Do you start the bidding with the total amount of my absentee bid?
Yes, a real estate absentee bid will be submitted in its entirety. For example, if your absentee bid is $100,000, your bid will be submitted as $100,000.

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18. Can I make an offer prior to the auction?
Absolutely. Using our purchase & sale agreement, we will submit your written offer to the seller, and all of the auction terms and conditions will apply. We recommend that you make your best offer at this time.

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19. How do I bid in the “live” auction?
It is best to use your numbered bid card to get the attention of the Auctioneer or bid assistant. Once the Auctioneer/bid assistant has acknowledged your first bid, they will be watching for subsequent bids. If you are the successful bidder, hold up your bid card so that the staff can record your bid number on the bid acknowledgment form. If the bidding exceeds your limit, simply shake your head “no” and the auctioneer/bid assistant will know that you are done bidding.

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20. What is a “bid assistant”?
A bid assistant is a staff member, usually one of the auctioneers not currently selling, who watches the crowd for bids. Sometimes called “bid spotters” or “ringmen,” they are extensions of the auctioneer. It is often difficult for the auctioneer to see all the bids coming from a large crowd; the bid assistant listens to the “chant” of the auctioneer and scans the room for the current bid. If a bid assistant yells out “yup,” the auctioneer knows that he has the current bid being asked for and will proceed to ask for the next bid.

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21. Where does the bidding start?
At PaisleyAuctions, bidding starts wherever the bidders want to start it. As a seller, it is important to remember that setting a minimum starting bid is not essential, because it is where the bidding ends that is important. The auctioneer will always try to get the bidding started at a realistic level, but if there are no bids, he will drop down to a lesser amount and repeat this process until the bidders begin bidding.

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22. What is an auctioneer's “chant”?
The auctioneer's chant is the rhythmic talk that orchestrates the sale of each property. To start the chant, the auctioneer describes the property up for bid and suggests an opening bid. Once he has an opening bid, he will repeat what he has and ask for a higher bid. For example: “I have $50,000 who’ll bid $60,000? I have $60,000, now $70,000. Do I hear $70,000? Sold $60,000 to buyer #...”

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23. Will the Auctioneer say “Going once, going twice…”?
No, you only see that in the movies. When the active bidders are done bidding, the Auctioneer says “Sold!” and moves on to the next property. Since the average time to auction a property is 6 minutes, it is essential that bidders get involved immediately and do not wait until the bidding slows down to make their interest known. There is a saying, “You snooze, you lose,” and it especially applies to buying real estate at auction.

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24. What is a bid acknowledgment form?
The successful bidder is required to sign one of our bid acknowledgment forms at the conclusion of the bidding. The form has the description of the property that he bid on, the bid, the Buyer Premium, the total with Buyer Premium and his bid number. This form verifies that the bidder agrees that he is the high bidder.

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25. What do I do after I sign the bid acknowledgment?
Next, you would sign copies of the agreement of sale, which indicates your agreement to all of the particulars of the sale. After the A & S documents are signed, you are on your way to closing.

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26. When and where does the closing take place?
PaisleyAuctions recommends 30-day closings. However, some sellers opt for 45- or 60-day closings for their auctions. The closing is usually conducted at a title company.  The winning bidder is afforded the opportunity to use the title company that we used to do the preliminary title search or use a title company of their choosing.  Closing can also be conducted at your attorney’s office.

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27. Is the closing different from any other real estate closing?
No, the closing is the same. The main difference between private treaty selling and the auction method is how the purchase price is achieved. Once the auction is over, your attorney and the attorney for the buyer get together and arrange for the closing in the customary manner.

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28. What happens if the high bidder fails to close?
PaisleyAuctions immediately notifies the backup bidder in order to secure a new purchase & sale agreement.  If unsuccessful, the high bidder risks losing their down deposit/down payment.

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29. What is “fair market value”?
Fair market value is the price for which a property will sell on the open market between a willing buyer and a willing seller, neither being forced to buy or sell as of a specific date. Since auctions are the purest form of free enterprise, where the laws of supply and demand prevail, fair market value is the price that a property will fetch at a well-advertised auction. Other factors that come into consideration are location, age, condition, quality, size and desirability.

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30. What is “high bidder's choice,” and when is it used in a real estate auction?
Properties that are similar (such as residential lots) may be sold using the high bidder's choice method. The auction is conducted to achieve a high bid, and then the high bidder may choose any or all of the lots in the group, each at that high bid amount. For example, if the bidder chooses three lots, the high bid is multiplied by three. This process is repeated until all lots have been auctioned.

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31. What does “auction by the acre” mean?
Land parcels are often offered “by the acre,” which means the high bid is multiplied by the number of acres to reach the total purchase price. For example: 150 acres x $500/acre = $75,000.

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PaisleyAuctions, Rodger Paisley CAI Auctioneer, GPPA Certified Appraiser, Downingtown, PA 19335
Serving Chester County, Bucks County, Berks County, Lancaster County, Montgomery County, Delaware County and the entire states of Pennsylvania, Delaware, Maryland, New Jersey and New York since 1987