Real Estate Auctions
I absolutely love the cadence of an auctioneer calling a bid and working a room. Not long ago I attended a charity auction and just couldn’t help myself. During the live auction I bid on 6 things and ended up winning 2. Funny thing is the 2 things I won I could take or leave, it was the thrill of the competition and winning that took ahold and I momentarily lost my senses. There is something about the quickness of the process that makes it so exciting. Guess that is the point, certainly worked on me.
Ohio real estate auctions blend both real estate and auction professional disciplines, with real estate regulation through the Ohio Department of Commerce, Division of Real Estate and auctioneers through the Ohio Department of Agriculture, Auction Program. There are special requirements for the auctioning of real estate, which are important to understand if you are considering adding this service for your clients.
Only a professional with dual licensure as an auctioneer and real estate salesperson or broker may enter into a contract for the auction of real estate. A real estate salesperson or broker may list property but if it is to be auctioned, the auction contract may only be signed by a dual licensee. When advertising the property for auction, the advertisement must contain the name of the dual licensee and his/her brokerage firm.
An Absolute Auction is defined in state law. It means that the property is to be sold to the highest bidder without reserve, that a minimum bid is not required, competing bids are not required and the seller cannot withdraw the property once the auction is opened. If a property is to be auctioned as absolute, the same must be reflected both in the auction contract and the advertising.
The definition of a Reserve Auction is also provided in state law. A property being sold with reserve means that the seller reserves the right to set a minimum bid, to accept or reject bids and the right to withdraw the property from auction. Like an absolute auction, the auction contract and advertising must state that the auction is a reserve auction.
Tip: An auction can only be absolute or reserve. There are not hybrid auctions, so you cannot have a property selling “absolute” with a minimum bid.
At the auction, the auctioneer must verbally disclose to the audience that the auctioneer represents the seller in the transaction. At the conclusion of the auction, the auctioneer is to provide the successful bidder with the agency disclosure statement.
Auctioning can be an effective way of selling real estate, provided it is done correctly with the right professionals involved. The goal of course being a frenzy to beat out competition and become the highest bidder, bringing the highest and best sale price for the seller. For me I’ll steer clear of real estate auctions, until I find a way to keep my composure.