Common Myths About Buying a Home at Auction

There are several ways in which someone can sell real estate, but few methods create the same level of demand as an online auction. As couples and families hunt through the market for the perfect property, sellers can stay in control of the final sale by partnering with a knowledgeable company to facilitate the process. If you are on the fence about selling or buying a home at auction, review some of the most frequent common myths about buying or selling a home at auction, to clear up any misconceptions.

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Myth #1: It’s More Difficult to Attract Potential Buyers After the Auction.

A property that does not sell during an auction will receive further attention through an auction company. This advertising might involve promoting the listing through local newspapers, email marketing, telemarketing calls, open houses or a Multiple Listing Service (MLS). Sellers also have the option to organize a second auction if there is a reserve in place. Since all the marketing materials are readily available, all the seller has to do is decide on a date to hold the follow-up event. They can schedule as many auctions as necessary until the property sells for the right price.

Myth #2: Only Experienced Investors Attend Auctions.

Real estate auctions often attract couples and young families searching for their first property. Buyers may have their eyes set on properties in a specific location, so it is possible that your listing checks off all the boxes on someone’s list. Online auctions are open to everyone and are becoming increasingly more accessible, so you may encounter individuals looking to remodel or move in as soon as possible. Businesses like Cates Auction & Realty Company utilize platforms compatible with smartphones, tablets and laptops for convenience. It is now easier than ever to get involved through our user-friendly auction platform. Online auctions are the most transparent way to sell or buy real estate on the market. Potential buyers follow a straightforward registration process and abide by the terms and conditions of the online platform to enter. Technology opens the opportunity for buyers to engage with auctions from home, school, work and beyond.

Myth #3: Properties Sold at Auctions Must Be Purchased in Full With Cash.

Working with an auction company gives buyers flexibility for financing. Winning bidders can choose to make payments through a lending institution based on the structure of the auction. This is done so individuals can pay for the property in installments similar to a mortgage.Always contact the auctioneer for a lender recommendation, or go through your bank to see what financing options are available for a given property. Only judicial sales require full payment at the time of auction.

Myth #4: Auction Gets a Lower Price Than Market Value.

Selling real estate via auction connects you to bidders located across the United States as well as international bidders. As a result, you have the potential to receive an offer that is higher than the market value of your property since all interested buyers can see real-time information about the latest bid. Anyone can submit a bid during the auction as long as they register for the event. Auction procedures differ from the traditional real estate selling process, as the time factor surrounding the event creates a greater sense of urgency to put in a bid. Interested buyers no longer have to wait for a realtor to return calls and emails. Rather, users have access to bidding information that would otherwise be impossible to gather at this speed. The limited window to place a bid during an auction can drive up buyer interest compared to traditional selling methods.

Myth #5: Selling a Home at Auction Costs More Than a Traditional Sale.

Auction companies charge fees to cover marketing expenses — investing money into marketing is what drives those in the local community to gain interest in the event. This process may cost the seller upfront, but it leaves room for long-term savings down the road. Auction organizations charge buyer’s premiums to the winning bidder. The buyer’s premium is added to the final hammer price of the property or the highest bid. The additional fee often covers commissions requested by the auction company. Someone buying a house at auction provides the opportunity for your property to leave the market faster than if you were to pursue a traditional sale, which would reduce applicable carrying costs and maintenance fees.

Myth #6: Real Estate Agents and Brokers Cannot Attend Real Estate Auctions.

Real estate agents and brokers are welcome to view public auctions. These professionals will often direct clients to these events if they know of them ahead of time. Real estate auction companies may pay commissions to realtors that influence the final sale.

Myth #7: All Properties Being Sold at Auction Are Foreclosures in Poor Physical Condition.

Foreclosures and short sales account for some auction events, but there are plenty of sellers that just want to work with a controlled sales timeline. Sellers have the flexibility to structure an auction with a fast turnaround, or individuals can plan their auction months out according to their preference. It is perfectly safe to buy houses at auction as long as you do your research. Not only are older homes in good condition sold at auction, but luxury homes and newly completed structures often sell in this way as well. See what you can find about the history of a home or construction project before the auction takes place. Property owners may organize online auctions for a variety of reasons, such as creating a high level of competition in a fast-moving market or gaining exposure for properties that have been sitting for some time. You can find multifamily homes, vacation properties, commercial structures and more available at auction with the right search filters.

Myth #8: The Seller Must Accept the Final Bid.

Sellers can structure an auction to best suit their interests. Only under an Absolute Auction does the highest bidder always win the property. The following auction types grant sellers further control:

• Minimum bid: The seller establishes the minimum offer they are willing to accept before the auction begins. The audience is aware of this information.
• Reserve: The seller has the right not to disclose the minimum offer they will accept. They can deny the highest bid at the end of the auction.

Myth #9: Properties Being Sold at Auction Cannot Be Inspected.

Auction companies typically hold open house events before an auction. Attendees are encouraged to bring a contractor with them, or a separate appointment may take place with the seller’s approval. Auctions at the judicial level are not subject to inspections.

Your Residential Auction Company Serving Kansas and Missouri

Cates Auction & Realty Company eliminates the hassles of buying and selling properties in the Kansas City Metro Area. Set the terms of your residential auction, and we’ll help you sell faster than using a traditional real estate agent. If you have questions about our services, complete a contact form online for further information.