How Auctions Work Which Properties are Suitable?  •  The Real Estate Auction Process Which Properties are Suitable? Most properties can be sold at Auction. Various types of Real Estate, including residential property, industrial property, vacant land and commercial property are sold at Auction. However, not all property is suited for Auction. To best evaluate your property’s candidacy for Auction, analyze the three primary components: the Property, the Seller and the Real Estate Market. If two or more of these components suggest using Real Estate Auctions, contact Pacific Auction Exchange. Property A good Auction property is one that is unique with strong buyer demand or limited supply, has a strong equity position for the owner, has high carrying costs for the property owner, or where the property is difficult to appraise thereby requiring competitive bidding to establish the fair market value of the property. Seller A good Auction opportunity is one where the property seller will need to be Auction-minded. Someone who has confidence in their property, and knows it will bring a fair market price. They should also have a strong equity position in the property. If they want to avoid paying sales commissions, the seller should make sure that this process is time sensitive, and this requires a timely property sale that they control, or, they will have a much higher carrying cost associated with the property. Market or Buyers A good Auction opportunity is one where the Real Estate Market and/or buyers are changing, where there is a limited supply of your property type with strong buyer demand (i.e.: water front property), or there is a flat or declining market with little buyer interest for traditional property sales. The Real Estate Auction Process A) Evaluate the property to determine if it is a candidate for Real Estate Auction (See “Which Properties Are Suitable?”) - Most properties can be sold at Auction. However, not all property is suited for Auction. B) List the property using an Auction listing agreement designed for the Auction Method of marketing Real Estate. Note: this is a critical distinction. C) The Seller selects the date the Auction will be held. D) The Real Estate Auctioneer develops a marketing plan. E) The Real Estate Auctioneer executes the marketing plan and markets the property for 3-4 weeks, which will maximize property exposure. The marketing effort is designed to create a sense of urgency that requires the buyer community to act on the Seller’s time schedule not theirs. F) Schedule a property viewing. Conduct one or two open houses that are two hours in length. This eliminates numerous and/or unscheduled showings while building a sense of urgency within the buyer community to purchase the property or lose the opportunity. G) Develop an Auction day strategy. H) Conduct the Auction on the day the Seller chooses. Register the qualified bidders by accepting their certified funds and issuing a bidder’s package and bidder’s number/card. Sell the property to the highest bidder. Execute a purchase agreement, that is designed specifically for the sale of Real Estate at Auction the day of the sale. Collect a non-refundable 10% down payment from the successful Bidder/Buyer. I) Close the sale within thirty days using an escrow company.