The Multi-Par Auction Format:
This auction method is used when there are several properties being offered that are contiguous, such as lots. With this method, each individual lot is offered at auction. Assuming the high bid meets or exceeds the minimum bid, each lot is "sold subject to an upset bid in a combination offering."
After each of the lots is offered individually, the auctioneer can offer combinations to the bidders. If a combination offered by the auctioneer nets the seller more than the sum of the individual lot sale prices, the individual lot sales are void and the high bidder in the combination is the buyer.
If the auctioneer offers the lots in combinations and there are no bids, the individual lot high bidders are the successful buyers.
Here are two real world multi-par scenarios I’ve encountered in the last year:
A 26 acre agricultural property; 13 of the acres were open and had residential improvements; the remaining 13 acres were wooded and split over two lots. We offered the lots individually and then we offered the property in entirety (which yielded the strongest response). This allowed neighbors to bid on the smaller parcels that bordered their land without being obligated to purchase the entire property. The seller was able to have his cake and eat it too by simultaneously exploring all of the different sale scenarios at once.
Two separately deeded office condos joined with a renovation that occurred sometime in the 1980’s; the owner has been receiving inquiry on the units individually. To add to the appeal, the building allows the units to be converted to a residential use. Prior to the auction, a formal bid from a contractor is being submitted so the seller can arrange to have the units reverted to their original configuration prior to settlement in the event that the units are sold separately. This strategy works because the units are separately metered with individual restrooms and separate entrances.
Have one seller with multiple parcels? Think Multi-Par Auction.
Comments(0)