Friday, June 20, 2008

We have many people ask us about buying and selling real estate at auction. Our auctioneers wrote the following primer to help familiarize people with the real estate auction process. We hope this helps you. Please feel free to contact RMEB’s auctioneers to answer and of your real estate auction questions. Visit and to learn more about our auctions in Colorado and the rest of the country.

Thanks for stopping by!
David P. Whitley CAI CES Auctioneer

Buying Real Estate at Auction 101

(185, 185, 185 now 190 will you bid 190?)

1. Buying real estate at Public Auction is fun, fair and easy. While some potential buyers may not be familiar with the process, it is open, public and transparent. It puts all potential buyers on exactly the same level, bidding on the same property, based upon the same terms. There are many reasons a seller may choose to sell his or her real estate at auction. Real Estate Auctions benefit the seller and buyer. The Auction method is quick, efficient and fair.

2. One of the differences in the Auction process versus a conventional listing is that all potential buyers must complete their due diligence BEFORE executing the contract. This means BEFORE the Auction. In a conventional listing, a potential buyer typically finds a property they are interested in and enters into a contract with the seller. The buyer then has a period to perform his or her inspections of the property, have surveys checked, investigate insurance and arrange financing. If the buyer is not satisfied with something about the property or cannot arrange suitable financing, he or she can then back out of the contract.

3. The Auction process reverses some of these items. An auction specific contract to buy and sell real estate is generally used. The seller will provide a good and clear general warranty deed to the property. The contract and a commitment to issue title insurance will be available at the previews for potential buyers to inspect. The contract will state that all taxes and utilities will be pro-rated to the day of closing. The title insurance and closing costs (which are minimal) are split between the buyer and seller. There are only two items in the contract to be determined on Auction day, the buyer or buyers and the sales price.

4. The seller has completed a property disclosure form that is available to all potential buyers. All potential buyers must make any inspections they desire BEFORE the Auction. This is why we schedule preview periods. We also will work with any potential buyer to allow her or him to conduct any survey, inspection or appraisal he or she may desire, at their cost. The seller wants every potential buyer to have as much information as he or she desires about this property. It is the potential buyer’s responsibility to satisfy him or herself as to all things that affect the value of this property. This puts all the potential buyers on exactly the same playing field. They will all be bidding on the same property, based upon exactly the same contract.

5. RMEB Realty has contracted to sell this property at Public Auction. It is the intention of the seller to sell the property to the highest bidder at the Auction. Sometimes the seller retains the right to accept or reject the high bid for a period of 48 hours after the Auction. The seller obviously cannot sell the property for $1000 but is prepared to accept a fair price. Come prepared to make your best bid on the day of the Auction or be prepared to miss out.

6. Many people ask, “Why is there a required deposit that is non-refundable”? The seller and the brokerage firm go to a lot of expense in preparing for and marketing the property to sell at Auction. The seller wants to be sure that when a high bidder is determined at the Auction, and a contract agreed to, that that high bidder will close the sale in thirty days or less. The deposit is a tool the seller uses to make sure the terms of the contract are met. This also pre-qualifies all bidders to a certain extent.

7. The sale contract will require a closing for cash within thirty days of the Auction. This does not mean that a potential buyer cannot obtain a conventional mortgage. It just means that all potential buyers must have their “ducks in a row” prior to the Auction. Get pre-qualified with a lender. Have a good idea how much your lender will lend on the property you intend to purchase. Be aware that the difference between the amounts you can borrow and the final contract price will have to come from you. Many people who purchase property at Auction easily obtain mortgages and financing. Just keep in mind that thirty days from the Auction, you will have to have the entire amount to close the deal or you will lose your deposit.

8 The seller has chosen to sell this property utilizing the standard 10% Buyer’s Premium. The Buyer’s Premium is a tool that Auctioneers and Sellers use to help defray the cost of the marketing and Auction. With the Buyer’s Premium, ten percent (10%) is added to the high bid price at the Auction to form the contract price. If the high bid at the Auction is $200,000, the Buyer’s Premium will be $20,000 for a total contract price of $220,000. If you only want to pay $200,000 then stop bidding at $180,000. This will result in a contract price of $198,000 saving you $2,000.

9. Who can bid? Anyone can bid. All we require is the $10,000.00 deposit and a photo ID. You then register for a bidder number and agree to the terms and conditions of the Auction. Our registration clerk will take all of your information, help you with the forms and accept your deposit check. If you are the winner, at the conclusion of the Auction, you will be required to sign the “Contract to Buy and Sell Real Estate” immediately. If you are not the winning bidder, you will return to our clerk and she will return your deposit check to you.

10. How does the bidding work? This is a live, open outcry Auction with a real, live Auctioneer. Yes, he can talk fast and yes, you will be able to understand him. Most all of the bidders will attend the live Auction. Sometimes we also have pre-qualified bidders bidding by proxy, on the telephone or live online. If this is your first time at a Public Auction, it may be somewhat intimidating to you. Do not let it be! We are here to help you. The Auctioneer is the person who will be “calling” the bids. “Ring people” assist him. These ring people are on the floor and can answer your questions and relay your bids to the Auctioneer.
Prior to the time of the Auction, our Broker will be available to answer all your questions. Please get all your questions resolved before the Auction. Once the Auction starts, things move quickly. When the time to sell this property arrives, the Broker will make some announcements. We record the entire Auction for the protection of all involved. After the Broker has completed the announcements, the Auctioneer will open the Auction.
Many people are afraid they will buy a property by scratching their nose. This never happens. The Auctioneer and ring people only accept intentionally placed bids. This is why many times you will hear the Auctioneer ask, “Was that a bid?” The Auctioneer will start the Auction by asking for a number, let us say $200,000. If you want to bid that price then raise your bidder number or signal to a ring person. If the Auctioneer does not have a bidder at $200,000, he will ask for less money until someone opens the bidding. Once there is an opening bid, the Auction is on! This is when the process speeds up. Be prepared to make your best bid but also know where you want to stop. Once the bidding process has started, many properties are sold in less than ONE MINUTE. You have to remember, there will only be one winner when the Auction is completed.

11. For how much will the property sell? This is the most asked question we face when conducting a real estate Auction. We never know the answer. In fact, we often have a contest where people who attend the previews may enter their opinion of the sale price of the property for a chance to win $100.00. We could have three different appraisers appraise any given property and they would all come up with a different opinion of its value. The bidders will determine the sale price of the property. It is the ultimate in our free market society. The Auction process is used to determine the value of everything from pork bellies to treasury bills and Microsoft stock. A properly marketed real estate Auction determines the value of a given property at that particular point in time. The high bidder will leave the Auction knowing he or she paid only one bid more than the next highest bidder bid. The Auction method is quick, efficient and fair. Buying real estate at Auction is fun, fair and easy!

Copyright 2006 RMEB Inc. All Rights Reserved.

Monday, June 9, 2008

RMEB CEO David Whitley attends NAA long range planning meeting in Spokane, WA.

Rocky Mountain Estate Brokers Inc. lead auctioneer and CEO David P. Whitley CAI CES recently attended a special long range planning meeting for the National Auctioneers Association held in Spokane, Washington June 3-5, 2008. Incoming NAA president Randy Wells chose twenty auctioneers from across the United States to work with him to develop a long-term plan for the continued success of the NAA. He employed a professional facilitator to help the group arrive at twenty long-term goals the association should strive to attain in the coming years.

Whitley said, “I was honored to be asked to be a member of this group. The auction business has been affected by many changes the last few years.” The twenty members of the group represented some of the world’s largest, most successful auction companies. “I may have been the member from the smallest auction company. I was pretty impressed to be sitting in a room with a vice-president from Ritchie Brothers. Even though there were many powerful auctioneers there, I really felt like my opinion mattered,” Whitley added. He stated, “We spent three long days talking about ways the NAA can better serve its members. I believe that any organization that serves its members well will increase its membership in the long run.”

Rocky Mountain Estate Brokers Inc. and its auctioneers are members of the National Auctioneers Association, The Colorado Auctioneers Association and the Wyoming Auctioneers Association. Three of RMEB’s auctioneers hold the prestigious Certified Auctioneers Institute CAI designation. Whitley said, “Successful auction are our business. We know that our membership in professional organizations keeps us on the leading edge of the auction profession. We are always looking for better ways to serve the needs of our auction clients.” He added, “Things like this long range planning meeting are an invaluable networking tool for us. Meeting these other auctioneers and becoming their friends gives RMEB a nation-wide network of expertise to draw from.”

Rocky Mountain Estate Brokers Inc. and its sister company Rocky Mountain Estate Brokers Realty LLC provide quality auction and auctioneering services to the Rocky Mountain Region. Through its staff, they service Colorado, Wyoming and Nebraska clients that desire professional auction services and sales for real estate and personal property. RMEB conducts many auctions at its 20,000 square foot Eaton Auction Center centrally located in downtown Eaton, CO. There they sell tools, machinery, cars, trucks, antiques, firearms, fine art and more. RMEB’s auction services extend beyond its main areas of Fort Collins, Greeley, Loveland, Boulder, Longmont and Denver, Colorado into Wyoming, Nebraska and beyond.

They offer live, real-time internet bidding on most of their auctions and have sold items to buyers from all over the USA, Mexico, Canada, Germany and other countries. Auctioneers David P. Whitley, Catherine "Casey" L Giddings and Robert L. "Bob" Johnson are all graduates of the Certified Auctioneers Institute and maintain the prestigious CAI designation. RMEB can be contacted through its websites at or or by telephone at 970-454-1010.