1 4. Getting Started in Real Estate Auctions Finding real estate auction properties and firms Working with real estate auction firms

2 Steps 1.Review state laws specific to real estate auction 2.Understand participation methods, responsibilities, and forms used 3.Select real estate auction firms 4.Attend auctions

3 Step 1: Review State Laws Specific to Auction Laws that pertain to selling real estate by auction Auction licensing requirements How to obtain education Members of the National Auctioneers Association may check state license laws at

4 Step 2: Understand Methods of Participation, Responsibilities, and Forms Used 1.Referring agent/broker 2.Listing agent/broker 3.Buyer's agent/broker

5 Referring Agent Responsibilities Help analyze needs, property, and market Refer seller to auction firm Cancel previous listing Send notice to MLS Collect referral fee

6 REALTOR® Code of Ethics Standard of Practice 16-4 REALTORS® shall not solicit a listing which is currently listed exclusively with another broker. However, if the listing broker, when asked by the REALTOR®, refuses to disclose the expiration date and nature of such listing; i.e., an exclusive right to sell, an exclusive agency, open listing, or other form of contractual agreement between the listing broker and the client, the REALTOR® may contact the owner to secure such information and may discuss the terms upon which the REALTOR® might take a future listing or, alternatively, may take a listing to become effective upon expiration of any existing exclusive listing. (Amended 1/94)

7 REALTOR® Code of Ethics Standard of Practice 16-6 When REALTORS® are contacted by the client of another REALTOR® regarding the creation of an exclusive relationship to provide the same type of service, and REALTORS® have not directly or indirectly initiated such discussions, they may discuss the terms upon which they might enter into a future agreement or, alternatively, may enter into an agreement which becomes effective upon expiration of any existing exclusive agreement. (Amended 1/98)

8 REALTOR® Code of Ethics Standard of Practice 16-3 Article 16 does not preclude REALTORS® from contacting the client of another broker for the purpose of offering to provide, or entering into a contract to provide, a different type of real estate service unrelated to the type of service currently being provided (e.g., property management as opposed to brokerage) or from offering the same type of service for property not subject to other brokers’ exclusive agreements. However, information received through a Multiple Listing Service or any other offer of cooperation may not be used to target clients of other REALTORS® to whom such offers to provide services may be made. (Amended 1/04)

9 Listing Agent Responsibilities— Before Auction Day Providing lead Canceling previous listing Sending notice to MLS Providing fact sheet on the property Performing market analysis Providing local licensing information

10 Listing Agent Responsibilities— Before Auction Day Completing due diligence Conducting property inspections Obtaining signs, photos, and keys Getting bids for maintenance and prop mgmt Assisting bidders with pre- qualification process Providing feedback to seller

11 Listing Agent Responsibilities On auction day: Accompany successful bidder to sign the contract After auction day: Help buyers with post-auction inspections, insurance, financing, etc. Assist in pre-closing events Attend closing

12 Listing Agent Responsibilities Forms used: Listing agreement between the real estate broker, auctioneer, and seller Auction contract to supersede listing agreement Pre-auction agreement outlining responsibilities of each party Special auction sales contract and addenda Prospect registration form Bidder's packet

13 Buyer’s Agent/Broker Responsibilities Primary responsibility is finding auction inventory: lists Web sites Newspapers

14 Web Sites to Research in Addition to Local MLS REALTOR.com RLIland.net Auctioneers.org NAArealestateauctions.com realtybid.com foreclosure.com and foreclosures.com Landandfarm.com Landbook.com Tranzon.com Marknetalliance.com

15 Buyer’s Agent/Broker Responsibilities Showing auction inventory to prospects Reading the property information package or bidder's packet Helping prospects determine market value of property prior to sale Registering bidder prior to auction Assisting bidder with choices and auction strategy

16 Buyers Need to Provide the Following at Auction: Good-faith deposit Personal check Letter of guarantee Identification

17 Forms for Buyer’s Agents Buyer registration for open houses Bidder registration for pre-auction Broker registration day of the auction Broker memorandum as part of the auction sales contract

18 Buyer’s Agent Compensation Established in writing by auction firm in advance of auction Buyer's agents need to determine if commission is paid on bid price, bid price plus buyer's premium, or some other amount.

19 Step 3: Select Real Estate Auction Firms Auction firm should: Be a REALTOR® firm if selling real estate Specialize in real estate auctions Have track record in auction business Be staffed with persons with professional designations

20 Step 3: Select Real Estate Auction Firms Auction firm should: Have staff for research, marketing, and public relations Provide references Established and financially secure Explain company charges and services Exhibit familiarity with market

21 Step 3: Select Real Estate Auction Firms Auctioneer should: Have experience selling similar properties Be able to tell you how many, what type and what price properties he or she has sold Be able to explain percentage of units sold that have actually closed

22 All Real Estate Professionals Should Ask Offering broker participation? Offering a referral fee or commission? What are contingencies and what disclosure documents is seller providing? Will sale be absolute or will seller have right to reject bid?

23 All Real Estate Professionals Should Ask Type of deposit required of buyers? Is property as is? If so, what representations re condition, title, etc.? Closing period? What else is expected of the buyer or seller in the agreement?

24 Buyer’s Reps Should Ask What are registration requirements for a buyer's agent? Is it necessary to have registration form signed by buyer in advance? Is a pre-bid necessary? Should I attend auction with my buyer?

25 4. Attend Auctions Is sales contract available for review? How easy is registration process? Do staff stimulate maximum bidding potential? Can bidders understand cadence of auctioneer? Does firm provide financial or pre- qualification services to bidders?

26 4. Attend Auctions Environment clean? Décor pleasant? Restrooms available? Food and beverages provided? Quality photos, slides, or video of the property used during the auction? Auction recorded?

27 Introduction to Real Estate Auction Thank you for your participation!