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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Selling Real Estate At Auction
Frequently Asked Questions From Sellers

 

1. What are the advantages of auctioning real estate versus listing it at a stated price?
When your property is “priced,” it leaves you open to under pricing or overpricing, and you will lose either way. If the price is set too low, the property sells quickly but equity is lost. The first bargain hunter that comes along finds a “steal,” perhaps making the profit that should have been yours. Likewise, if the price is too high, the property does not sell. It then has to be advertised again at a lower price or negotiated through haggling with one potential buyer at a time. Unless sold quickly and efficiently, real estate can become an expensive liability (taxes, maintenance, insurance, etc.). In addition, the process of hosting repeated showings and open houses can be disruptive and frustrating if a serious buyer does not come forth. Auctions create a sense of urgency and produce true fair market value. Simply put, when a group of serious buyers are brought together to compete, it drives the price upward. The competitive atmosphere then generates its own “buzz,” which leads to even more spirited bidding. As a result, auction is the only method of marketing that offers you the potential to receive more money for your property than you would have asked if pricing it outright.

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2. 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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3. 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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4. What determines whether my property is a good candidate for auction?
The most important factors are your motivation to sell and the marketability of the property. The ideal candidate for the Auction Method would be a motivated seller who owes less on the property than what the current market is expected bring. Factors such as condition, location and amenities are also key.

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5. Can I auction a property that has a mortgage, taxes or liens owed?
Yes, most sellers have a mortgage and/or other liens on their property. You have until the closing to pay off any outstanding debts and provide insurable title to the successful bidder.

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6. What do you mean by “insurable title”?
If a Pennsylvania title insurance company will insure the property at closing, you have completed your obligation to the buyer. All PaisleyAuctions  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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7. 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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8. 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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9. 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. Most Rogers Auctioneers property auctions are conducted subject to seller confirmation.

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10. 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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11. 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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12. How does PaisleyAuctions get compensated for services?
You, as the seller, pay a commission; however, the buyer offsets our commission in the form of a buyer’s premium. You are responsible for the marketing expenses. For our part, we will provide you with a budget and timetable, and we will execute the marketing.

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13. 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.

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14. What is the usual timetable for a real estate auction?
Typically, we recommend allowing 6-8 weeks from the time your property is listed until the auction date. This schedule ensures we have enough time for brochure distribution, posting signage, several rounds of advertising, and previewing. If this timeframe is not workable, we will explore other options with you.

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15. What type of marketing campaign will you use to sell my property?
PaisleyAuctions conducts an extensive promotional campaign for your property. The plan includes advertising (traditional & internet), signage, our website as well as numerous other internet sites, emails, illustrated brochures. National, regional and local ads are run for three-and-a-half weeks prior to the auction. Brochures are mailed to adjacent property owners, several hundred neighbors, our database of proven buyers, and real estate agents. The timely marketing creates a sense of urgency, which drives the most serious buyers to your auction.

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16. Where is the actual real estate auction held?
Depending on the location and type of property, we will either conduct an “on-site” auction at the property under one of our tents or an “off-site” auction either inside a hotel ballroom, restaurant or other building suitable nearby. We will do a free site analysis for us to determine which would be a better auction environment for your specific circumstances.

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17. 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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18. How do I know whether potential buyers are qualified to buy my property?
We use a proven system to get all serious bidders on a level playing field before competing for your property. When registering, bidders must meet the following criteria: (1) provide a valid form of positive ID (such as a driver’s license); (2) sign the terms & conditions agreeing to the rules of the auction; and (3) submit a bank check, guaranteed funds or cash for their initial down payment. No one may participate unless they have properly registered. Furthermore, after the property sells, the successful bidder will sign a bid acknowledgment form and a contingency free purchase & sale agreement, and provide a second down payment representing from 10-15% of the purchase price. The bidder will agree to close within 30-45 days, and that “time is of the essence,” meaning that if they fail to comply, they have agreed in advance to forfeit their down payments.

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19. Will I sign an agreement if I decide to sell my property at auction?
Yes, you will sign a real estate listing agreement provided by PaisleyAuctions If you would like to review a standard copy of our agreement before signing one for your property, we will furnish one upon request.

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20. What paperwork will I need to provide if I list my property?
PaisleyAuctions would like to have copies of any available documents pertaining to your property, such as the deed, the survey, the tax ID number, and a recent tax bill. We also have a Property Fact Sheet for you to fill out, which we will use to describe the property in our brochures and ads.

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21. Will potential bidders be able to view my property prior to the auction?
Yes, in addition to the website listing, ads and direct mail brochure, we also offer free preview by appointment or set dates and times.  The preview is an opportunity for buyers to closely examine individual properties prior to the auction. We strongly recommend that all buyers preview properties before bidding, and that they take advantage of the opportunity to bring their contractor, home inspector or buyer’s broker with them for inspections.

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22. What can I expect on auction day?
You will be represented by a professional auction team, and bid assistants, plus all of the equipment necessary to conduct the registration process and auction. We will give a presentation on each property prior to soliciting bids. Once the auction begins, the auction team will work with the buyers to obtain the highest possible price. Immediately following the sale of the properties, contracts will be signed, down payments will be placed in escrow, and you will be on your way to closing.

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23. 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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24. 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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25. What is a bid acknowledgment form?
The successful bidder is required to sign a 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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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 “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, 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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30. 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