Broker Participation At Auction

If you have ever had a client call you on Monday morning and say, "We Bought A House At An Auction This Weekend!"   - This article is for you.

Broker Participation is the term used when an Auction Company will allow outside Brokers / Agents to bring their clients to an auction and get a referral or be paid a flat fee/percentage for doing so.

For the most part, auctions are designed to have the auctioneer represent the seller.  It is not required or needed that a buyer has their own broker to represent them when buying at auction.

At auction, the terms are set forth prior to the sale and all potential bidders must agree to the terms prior to bidding.  There are no negoitations outside of the transaction.

Broker Participation -here is what you should know.

• You may be required to attend the auction with your client.
• You are expected to be the procurring cause for your client to even know about the auction.
• As with all transactions - you are to perform due diligence for your client.  This would be providing a CMA or tracking down any information your client deems important.
• You may be requried to Submit an Opening Bid.
• Broker Participation At Auction May Result in a % of the sales price, or just a flat fee.   

Why Broker Participation Is Not Offered

• Commissions may already be split with a referring broker on the sale of the property.

• The portion of the commission usually set aside for cooperating broker may be used for marketing or other parts of the auction.

• I've had some Some sellers feel that if their property has been previously listed; all potential brokers had the opportunity to procure a buyer for the sale of the home during the period it was listed before the auction.

• Sometimes, there may not be enough commission to go around.  A property could be selling a lesser rate than you would imagine.

• At an absolute auction, there is a guranteed sale.  Most buyers will attend the auction if they are truly interested.

I have seen in the past Buyer's Agents- feel the need to try to always get a better deal for their client.  This may involve trying to renegoiate terms after the sale.  - Not Ethical, OR try to negoiate more money in the broker participation rate.

I have also seen Brokers stand at the entrance of the property on the day of the sale and try to sign up buyers as they were walking up...Trying to lure them in with the false idea that they need to be represented, and providing them trivial paperwork such as a public tax record or past MLS Sheet.

The intent is for you to bring your clients that you have been working with - and be compensated if they are the winning bidder.

It is permissable for your client to pay you outside of the transaction at an auction if you are not happy with the fee being paid.

Speaking with experience,  I can assure you - it beats being paid nothing.