How To Get Involved in Real Estate Auctions
There are several ways to get involved in real estate auctions.
A. Agents/Brokers can refer clients or customers
B. Be a cooperative agent/broker
C. Be a listing agent/broker (co-broker)
Read on for more information on each of these options!
OPTION A: Agents/Brokers can refer clients or customers
A real estate agent or broker can refer a seller to an auction company and receive a referral fee. The referring agent or broker may also be instrumental in convincing the seller of the merits of auction.
Responsibilities of Referring Agent/Broker:
A. Help seller analyze his/her needs, the property, and market to determine if a good auction situation exists
B. Refer seller to professional real estate auction company
C. If a negotiated sale listing agreement exists, cancel the previous listing to be superseded by an auction contract
D. Send notice to MLS stating that the property will be sold at public auction
E. Collect referral fee from auction company when the property closes
Types of Agreements Used in this Situation:
-Auction contract to supersede listing agreement
OPTION B: Be a Cooperative Agent/Broker
A cooperating (selling) agent is any agent/broker who sells a property. He or she may be the:
Subagent
Buyer's agent
A dual agent
A cooperating agent or broker registers a buyer who purchases property offered through an auction and earns a commission established by the auction firm. This agent or broker accompanies the bidder to pre-auction events and the auction, registers him or her to bid, and receives a portion of the commission.
Responsibilities of Cooperating Agent/Broker
Before the Auction
A. Call auction companies to be placed on their mailing lists
B. Attend real estate auctions to learn how they work
C. Advertise yourself as an agent/broker who is knowledgeable about auctions to obtain prospects
D. Attend pre-auction open houses with prospects
E. Help prospects determine the market value of the property prior to sale (check comparables, property indebtedness, title, lien and market conditions, and read the due diligence or bidders packet)
F. Learn the rules necessary to earn a commission for registering a successful buyer
G. Learn the terms of the auction
H. Register bidder prior to the auction pursuant to the auction firm's requirements
I. Assist bidder with auction strategy
During the Auction
A. Attend the auction with prospects
B. Help them register
C. Assist prospect with bidding strategy
D. Accompany successful bidder to contract room
After the Auction
Collect commission check when property closes (usually handled by title or escrow company)
Types of Agreements Used in This Situation
Buyer registration at open houses
Broker registration for prospect representation
OPTION C: You can be a Listing Agent/Broker (Co-Broker)
A listing agent/broker is an agent of the seller who markets the seller's property and represents the seller during the sale and at the closing. In a sale by auction, the listing agent/broker manages many traditional real estate functions and shares the commission based on the amount of involvement and the relationship defined by the parties involved. This relationship is beneficial for auctioneer and agent when services by a local auction or real estate company are needed or when an agent identifies a potential auction situation for a seller and the agent is not an auctioneer.
Responsibilities of Listing Agent/Broker
Before the Auction
A. Provide the lead (in most cases)
B. If a negotiated sale listing agreement exists, cancel the previous listing to be superseded by an auction contract
C. Send notice to MLS stating that the property will be sold at public auction
D. Provide a fact sheet on the property
E. Perform market analysis
F. Provide local licensing information
G. Complete due diligence
H. Order and obtain sign, photographs and keys
I. Obtain bids for maintenance and supervise property management
J. Hold open houses for inspection
K. Assist bidders with pre-qualification process
L. Provide feedback (progress reports) to the seller
During the Auction
A. Assist auctioneer in bid process as needed
B. Accompany buyer to contract signing room
After the Auction
A. Help buyers with post-auction inspections, insurance, financing, etc....
B. Assist in pre-closing events
C. Attend closing
D. Collect commission check when the property close
Types of Agreements used in this Situation:
Listing agreement between the broker, auction company and seller
Auction contract to supersede listing agreement
Pre-auction sales contracts and addendum
Prospect registration forms
Copyright NATIONAL ASSOCIATION OF REALTORS®
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