The Auction Advantage
Why should you consider the
auction marketing method? The following are a few documented advantages
commonly cited by those in the industry:
For Sellers:
·
Buyers come prepared to buy your property. The
purchase is not contingent on financing.
·
The auction creates a sense of urgency and
brings interested parties to a point of decision.
·
Auctions create maximum exposure for the
property. Auctions are a concentrated effort, so the exposure and efforts are
more intense and visible.
·
The seller avoids high carrying and holding
costs.
·
Auctions create and increase buyer
competition for property resulting in higher prices.
·
The seller can set a specific date, time, and
location for sale of the property.
·
Seller controls all of the sale conditions
and terms.
For
Buyers:
·
Buyers know the seller is committed to sell.
·
The buyer knows he is getting the property at
a fair market price set by public bidding.
·
The buyer has full control of what he wants
to bid to own the property.
·
Auctions reduce the potential negotiating
time for the buyer.
Auction Formats for Real Estate
- Public Auctions
The public auction process is a tried and true method of selling real
estate in the United States. At Farmers National Company, we know that the
auction method has the ability to get you top dollar while you remain in
full control of the selling conditions and terms. It also offers you a
chance to sell your property in a reasonable period of time. We work with
you to choose how the actual auction will be conducted. There are several
options to consider:
- Undisclosed
Reserve Auction
Through a reserve auction, the public is placed on notice that the auction
is being conducted with a reserve price. You, as the seller, have the
right to accept or reject the highest bid made. You agree on the reserve
price with Farmers National Company in advance of the auction, but it is
undisclosed to the public. This is our most common type of auction and
brings you, the seller, several advantages.
- Oral
and Bid Sales
When the circumstances surrounding a sale or local market conditions
preclude the use of a public auction, our agents can offer several special
auction methods. One is the bid sale auction in which bidders are required
to submit their highest and best offer in writing. Occasionally, in
certain situations, qualified bidders are then invited to extend their
offers in a controlled competitive bidding setting. Ultimately, your
Farmers National Company agent will utilize their knowledge of the land
market to recommend the most effective auction method that will give you
the best sale price for your property.
Farmers
National Company is one of the pioneers in offering farms and ranches at public
auction using a multi-tract system. This method involves dividing larger
properties into multiple bidding units and then allowing potential purchasers
to submit bids on individual tracts, combinations of tracts, and finally the
whole property.
All
bids are entered into our tracking system and displayed for the public to view
throughout the open competitive bidding process. Offering property under the
multi-tract system increases the number of buyers who can afford to purchase,
creating excitement and demand. It gives all bidders an equal chance to
compete.
Bidding
is more flexible and can result in more bids and increased values. The very
fact of dividing a property can transform it from one with limited sale
potential to a highly competitive auction property that will bring a higher
sale price.
- Online
Auctions
For sales that have special circumstances and special needs, Farmers
National Company can offer a web based, online only auction service.
Competitive bidding takes place through a secure internet site.
The Auction Process
The following describes the different
components of the auction process for a property:
- Marketing
An aggressive marketing program is critical to an auction's success.
Massive interest must be created in the property. The advertising budget
is set according to specific properties and the type of market that needs
to be reached. The budget is then broken down into various forms of
advertising that will best reach the market for the individual property.
Direct mail, newspapers, trade journals, radio, property signs, telephone
solicitation, property brochures, and an extensive web presence.
Depending upon the type of property, location, value, and the size of the
market area, the advertising budget is set to maximize exposure to the
potential buyers.
The auction staff will devote many days of prospecting the market to
identify potential buyers and discuss their interest in the property to be
offered.
- Time Frame
The allowed time for a real estate auction varies depending on the type of
property, but generally it is 60 to 90 days from the initial planning
stage to closing. The auction itself may take from just a few minutes for
single property to several hours for a multi-parcel auction.
- Terms of an Auction
The seller sets the terms and conditions of the auction with advice of the
agent and auctioneer. The terms must be in balance...keeping in mind that
there are two parties in the transaction. There should be no contingency
clauses on auction day. All possible concerns and questions of the buyers
should have been addressed prior to the sale day. Usual terms are that the
high bidder(s) deposits with the auctioneer an advertised earnest money
deposit (% of the purchase price) and enters into a pre-approved contract
immediately following the auction. The balance is paid in 30-60 days with
delivery of good title from the seller. Items of consideration in sales
terms:
- Percent
Down
- Leases
- Reservation
of Minerals
- Property
Information to be Provided
- Legal
Descriptions
- Closing
Date to be Advertised
- Abstract
vs. Title Insurance
- Real
Estate Taxes
- Maps
- Possession
- Survey
Additional Auction Information
View
Multi-parcel Auction Video
Auction
Questions to Consider
FNC
Auction Calendar
FNC
Auction Results
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