Okay, so I have a home that two sets of my buyers are interested in purchasing. The home disappeared off of the MLS and is now going to auction. Can't say I blame the owner/lender for doing so, since the home has been on the market for a bit of time now. Yet, the problem I have is that the commission can be blown off by the buyers for the agent who was the procurring cause through the auction website. Now, I definitely do not recommend going to an auction or even bidding on a property with an auction company without an agent, but believe you me, it can and does happen. Hopefully I have developed enough trust with my buyers, and loyalty, so that they will be faithful to me for the assistance I have provided thus far, but I got to thinking about how many agents lose their buyers to these kinds of real estate auctions.
If the buyers choose to take an agent to the actual auction, the agent has quite a few hoops to jump through in order to collect compensation for their work. Yet, the buyers can go unrepresented and purchase the property without an agent with no hoops, other than lending (which could be a ton of hoops in and of itself). If the buyers choose to bid online, they can do so, without an agent.
Auction companies would much rather the buyers come alone because they then make more money since the don't ha
ve to pay out commission. I think this is dangerous for our buyers. They need representation. On top of the commission issue, there is quite a bit that both buyers and agents need to learn prior to attending an auction. Here are some small tips to get you started...
My main advice for you to give your buyers:
1. Take an agent. Be represented. Make sure it is an agent who has thoroughly educated themselves on the auction process of this particular property (they are all different).
2. Do your mortgage homework WAY before the auction. Be very prepared. Once you bid on this house and you win the auction, you are to have quite a number of documents proving that you are capable of purchasing the home.
3. Make sure you realize that this property is 'AS IS' with absolutely no contingencies.
4. Know the fees associated with buying from an auction. They usually have a 5% or more fee associated with purchasing a property live or online.
5. Don't be too bummed if you don't get the home. A great majority of them do not get purchased at auction and go back onto the market. Plus, there will be another house.
My main advice for Agents:
1. If you can avoid sending them to the website, do so. If they go to the website, they can bid themselves. I say this to protect them, and your commission.
2. Talk to the agent who had the property listed. They are usually the main contact for the auction company as well, and the home usually goes back on the market through the previous listing agent if it doesn't sell at auction.
3. Do your research. There is a lot to watch out for with auctions. Have extra forms or addendums made up to protect yourself, if needed.
4. Educate your buyers along the way. Make sure they know what they are getting into, and make yourself very valuable to the process.
5. Have fun. Auctions are a hoot at times! Don't get carried away and bid too high!
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