Coldwell Banker Premier Properties - Real Estate Auctions

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Real Estate Auction

Realtor® Involvement

1. Referring Agent/Broker

A referring real estate agent or broker refers a seller to an auctioneer, then receives a referral fee established by that auctioneer. This broker usually does nothing more than introduce a potential seller to an auctioneer. This broker may be instrumental in convincing the seller in the merits of real estate auction.

Referring Agent/Broker activities:

Refer seller to auction firm
Locate local and regional auction firms that auction the type of real estate that you contract
Attend real estate auctions to learn how they work
Refer to the Auction Firm Criteria Checklist to assist you in choosing an auction firm to refer clients and customers
Learn the auction firm's commission for the referring a seller (referring broker commissions and responsibilities will vary)
Help seller analyze his or her needs, the property, and the market to determine if it is a good auction situation. Compare to negotiated sale.
Refer seller to real estate auction firm
If a negotiated sale listing agreement exists, cancel the previous listing to be superseded by an auction contract. The referring agent/broker signs this contract. Send a notice to MLS stating that the property will be sold at a public auction.
Collect referral fee form auction firm

Types of agreements used in this situation:

Auction contract to supersede listing agreement

2. Cooperating Agent/Broker

A cooperating (selling) agent is any agent who sells a property; he or she may be the (1) the subagent or listing agent of the seller; (2) a buyer's agent' or (3) a dual agent. A cooperating agent or broker registers a buyer who purchases property offered through an auction, then earns a commission established by the auction firm. This broker may accompany the bidder to pre-auction events and, on auction day, bring the bidder, register him or her as a prospect, and receive a portion of the commission paid by the seller.

Cooperating Agent/Broker activities
Before auction day:

Call auction companies to be placed on their mailing lists
Attend real estate auctions to learn how they work
Advertise yourself as a real estate broker who is knowledgeable about auctions so that you can obtain prospects
Attend pre-auction seminars or other activities
Show auction inventory to prospects
Help prospect determine the market value of a property prior to sale by becoming familiar with it (check property indebtedness, the title, lien and market conditions, and read the due diligence or bidders packet)
Learn the commission for registering a successful buyer
Learn the terms of the auction
Register bidder prior to the auction, depending on the requirements
Assist bidder with choices and auction strategy

During auction day:

Bring bidders/prospects to the auction
Help them in registration
Assist bidder with choices and auction strategy
Accompany successful bidder to contract room

After auction day:

Collect commission check from closing (usually handled by title or escrow company)

Types of agreements used in this situation:

Buyer registration for open houses
Bidder registration for pre-auction
Broker registration day of auction
Broker memorandum as part of the auction sales contract

3. Listing (Co-broker) Agent/Broker

A listing agent is an agent of the seller who markets the seller's property and represents the seller during the sale and the closing of the seller's property. In a sale by auction, he or she handles many of the traditional real estate functions and shares the commission based on the amount of involvement and the relationship defined by the two parties. This relationship is beneficial for auctioneer and agent when services by a local auction or real estate company are needed or when a real estate agent identifies a potential auction situation for a seller and the agent is not an auctioneer.

Listing (Co-broker) Agent/Broker activities:
Before auction day:

Provide the lead (in most cases)
If a negotiated sale listing agreement exists, cancel the previous listing to be superseded by an auction contract. The referring agent/broker signs this contract. Send a notice to MLS stating that the property will be sold at public auction.
If available, provide fact sheet on the property
Perform market analysis
Provide local licensing information
Complete due diligence
Hold open houses for inspection
Order and obtain signs, photographs, keys
Obtain bids for maintenance and supervise property management
Assist bidders with pre-qualification process
Provide feedback to the seller (progress reports)

During auction day:

As bid assistant, assist auctioneers in bid process
Accompany buyer to contract signing room

Following auction day:

Help buyers with post-auction inspections, insurance, financing, etc.
Assist in pre-closing events
Attend closing

Types of agreements used in this situation:

Listing agreement between the real estate broker, auctioneer, and seller
Auction contract to supersede listing agreement
Pre-auction agreements outlining responsibilities of each part
Special auction sales contracts and addendum
Prospect registration forms
Bidder packets