How to represent a buyer at auction; many would-be auction buyers are unaware that they can be represented by their own real estate agent. This morning I represented a buyer at a condo auction. While a large crowd had gathered to bid, my investor client was one of the few people that had his own Realtor accompanying him.
As we stood awaiting access to preview the properties, the assembled bidders were asking about the property taxes, the condo fees, and the leases. By request I had received the full condo resale packet and a copy of the lease from the auctioneer a few days in advance of the auction. My informed client was at an advantage before the bidding even began.
Auction buyers, did you know in most cases you can be represented by your own real estate agent at no additional cost to you?
Agents, here's how to represent a buyer at auction:
Once you've identified the auction property, contact the auction firm to register your client. Specifically, request the broker participation agreement. This is a document that auction firms use to register buyer agents and their clients. It outlines the compensation (commission). Most of the time this form is available to be downloded from the auction website. This form needs to be completely filled out and submitted to the auction firm 24-48 hours prior to the auction. Bring a completed copy of the form with you to the auction.
Look up the auction listing in the multiple list and download the auction property information packet (which usually found on the auction website).
Gather other documents your buyer client will need; property tax information, leases (if applicable) condo and HOA resale packets (if applicable) neighborhood covenants, surveys, zoning information, state disclosures, etc. Often these documents are also available to be downloaded from the auction website. Sometimes you may need to request a copy.
Comparable market data - here's where you can really be a value-add for your client. Pull the comps and review them with you client prior to the auction. You want to make sure your client can recognize a good deal. I hear people in auction audiences murmor about values, but usually they are based on unscientific means. Get the data and get familiar with it.
Request access to preview the property. Most of the times the previews are listed on the auction website and on the MLS listing. Auction firms that sell a high volume of properties may only offer access one hour prior to the sale. Another reason access may be limited is if it is a distress sale such as a foreclosure auction on the court house steps.
Review the auction terms with your client. Each auction company and in-fact every auction can have unique terms. Don't make assumptions, read the fine print. If you have any questions, ask the auction firm.
If your client plans to finance their auction purchase, have them meet with a lender before the auction. Auctions typically require settlements in 30-45 days. Understand that an auction purchase can not be contingent upon obtaining financing.
On the day of the sale, arrive with your client and register them for a bidding card. Agents, you must attend the auction to get paid. Your client will need a certified cashiers check made payable to themselves for the deposit. They'll also need to present their drivers license. Some auction companies will have buyers sign a copy of the auction terms and conditions, the ones you've carefully read in advance.....right? That's how to represent a buyer at auction.
Is it profitable to represent auction buyers? It can be. While the commission tends to be a bit lower, it's certainly as much as a commission you might see as a leasing agent. In some cases the commission to the buyers agent is generous. If your client does not end up "winning" the auction the benefit to you is that they are standing there next to you check-in-hand ready to purchase real estate.
Beyond the mechanics, auctions are fun.
This blog post is how to represent a buyer at auction and it's written for real estate agents. Want to know how to buy real estate at auction? I've published on that topic, click here to read all about it.
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