Vestport Inc. Auctions

The auction method of selling real estate is a great way to accelerate the marketing of your property with a much better potential to actually sell it in a timely fashion. A common misconception is that all properties sold at auction are foreclosures. This is simply not true and greatly overemphasized. In fact the voluntary sale of real estate at auction is one of the hottest new trends that is sweeping the nation and becoming more popular in this area as well. Even if your property is currently listed with another real estate professional we can work with them to get your property sold. They just need to call us for more information.

Note: As a disclaimer this is just one of many hypothetical examples of how the auction process works ideally. There are just too many variables to say that the process itself is always structured just one way or another. All items below if not stated specifically are according to the terms and conditions of the listing contract itself for that particular property and as agreed to by both parties. Vestport Inc. always advises our real estate clients and customers to have a qualified attorney on retainer to review any and all documents. Also it is important to note that this example is not how all auctioneers conduct auctions. This is an example of how we may propose to conduct your auction.

Here are some potential benefits:

1. No Contingencies on financing

2. Much Less inconvenience showing your property repeatedly

3. Much less sustained cosmetic appearance maintenance

4. Multiple buyer's with certified down payments secured and ready to bid

5. Return of all advertising investment expenses 100% if sold with escrow closed within the initial listing period.

6. Speed

Why does it work?

1. Careful property, demographic and targeted audience data research.
2. Highly accelerated marketing campaign that is well focused.
3. Real estate professionals are welcome to bring their buyer's in most cases and can earn a buyer's commission upon the successful closing of escrow within the initial listing period if pre-registered and adhering to the terms & conditions for that particular auction. Real estate buyer's agents will be asked to sign a rejection of sub-agency so there are no conflicts of interest.
4. Website with easy access to property information, advertising and relevant downloads for internet users.
5. Competitive bidding
6. High bidder must perform or risk losing substantial deposits in most cases
7. Seller must perform or risk forfeiting advertising investment, no-sale/cancellation fee and service fee.
8. Both sides of the transaction are highly motivated
9. Professionalism & experience

How does it work?

1. We fill out a state mandated Agency Disclosure with the seller client since we are also licensed real estate professionals. (See our Real Estate 101 Agency section for more.)
2. The auctioneer must first speak with the potential client and determine if the property is a good candidate for auction or not.
3. A marketing budget is determined based on the subject property that considers who the best potential buyer's may be and where they are located. For certain high profile properties this may even be out of state, national or international.
4. The property is prepared for auction.
5. A marketing plan and advertising schedule that can be verified by the seller is launched after the property has been prepared. Typically marketing starts and continues weeks before the auction.
6. An auction Open House is hosted in most cases for 1 to 2 hours one week prior to auction.
7. During the advertising period right up until the auction bid calling only persons with the required down payment in certified funds will be registered and receive a bidder card. Registered bidders must leave a down payment, sign the terms and conditions of the auction and be given an agency disclosure filled out with Vestport Inc. representing them as a facilitator unless they are represented otherwise. Vestport Inc. clearly represents the seller and will only represent a potential buyer in the capacity of a facilitator to avoid a conflict of interest with the seller. The only time that Vestport Inc. would not furnish a state mandated disclosure to a potential buyer would be if the bidder was professionally represented and signed a document verifying that as well as a rejection of sub-agency.
8. Only persons who sign in at the Open House will be allowed to tour the property.
9. A final showing may be added on the day of the auction in many cases.
10. Any questions are welcome and will be answered from all persons during the advertisement period right up to the start of the auction. When the auction starts no further questions will be answered period and the auction will commence.
11. The auction is concluded when the highest recognized bidder is identified.
12. The high bidder will be asked to immediately execute the P&S contract and must complete payment of the buyer's premium (if any) within 24 hours or according to the terms and conditions of the particular sale or risk forfeit of their initial down payment.
13. The balance of bidders who were not high bidders will have down payments returned to them in exchange for their bidder card and upon verification of proper identification.
14. Property closes escrow on the date that the seller client specified in the P&S contract prior to auction.
15. Upon the successful closing of escrow within the initial listing period monies due to the seller as stated in the listing contract are paid to the seller, any buyer's commissions agreed to in advance and in writing are paid to buyer's agents and the transaction is complete.

What is the seller�s initial investment?

1. Marketing budget (refunded 100% upon the close of escrow if within the initial listing period)
2. Service/No-Sale Fee (one in the same) is retained by the auctioneer to cover auction expenses and services.
3. Cancellation Fee is not refunded if the auction is cancelled by the client/owner but is refunded 100% as long as the transaction closes escrow within the initial listing period.

Why are your chances better with an auctioneer that is also a licensed real estate professional?

Auctioneers who are not licensed real estate professionals cannot negotiate deals before or after a sale legally if they are not also licensed real estate professionals. Here at Vestport Inc. we can offer both services as an asset and utilize our licensure legally and ethically to get the job done right in a very short period of time in most cases. We also cooperate with other real estate professionals via written contracts if you are already working with someone that you are happy with. Real estate professionals should consult with their principal broker first before calling us.

As an example take a reserve price auction, which is an auction where the seller agrees to sell only as long as a certain price can be met. Also assume that the high bid at auction was shy of the reserve by even several thousands of dollars. Well an auctioneer that is not also a licensed real estate professional has to call it a day and that's it. They must now go back to their client and say something like "oh well, we tried". Legally they cannot negotiate the deal directly with the buyer and seller at any time before or after the auction. So in a case like this where a reserve may not have been met at the auction we can go the extra mile and negotiate directly between a potential buyer and the client/seller. Most times a reasonable agreement can be reached promptly right at the auction with a P&S fully executed. Also, consider that more than likely there were several other registered bidders at the auction that left substantial deposits and were obviously serious about this property. There is no better list of qualified prospects to buy your property than that as one more method to get it sold. This is an excellent position to be in as a seller with a plan A, B, C and D already covered in advance.

FAQ's

Do all of the buyer's premium monies belong to the seller?

A: In most cases none of it. With our auctions and again according to the specific terms and conditions as agreed to of the specific property and auction we may elect to refund your entire marketing investment 100% upon the successful close of escrow within the initial listing period and most times do just that.

So any extra monies from the Buyer's Premium are kept by the auctioneer then right?

In many cases to attract additional potential bidders/buyers the auctioneer may offer an incentive to real estate professionals in the form of a buyer's commission and according to the terms and conditions of the particular auction. The buyer's agent with a buyer that is named in the P&S contract is upon the successful close of escrow within the initial listing period is paid a commission out of the Buyer's Premium charged to the buyer.

So as you can see in reality many times the auctioneer (at least here) only receives a very modest service fee plus only a portion of the Buyer's Premium. This is another misconception that all auctioneers keep the whole buyer's premium. There are just too many ways to structure the deal, marketing plan, commissions etc. to say that things are just one way or the other. Also, all commissions etc. and contracts are negotiated and never fixed. Service fees are basically to cover time spent preparing for the auction, making sure the advertising schedule is on track, registering bidders, answering questions etc. Service fees are not the profit margin for Vestport Inc. they simply cover expenses. Any profits are realized by what is left from the buyer's premium, which can be very modest especially as compared to traditional brokerage commissions. Any profits are paid by the buyer or more specifically from the buyer's premium not by the seller! The seller's only realistic expense providing that the property closes escrow within the initial listing period should only be the Service/No Sale Fee. We play fair and pay fair to try and keep everyone interested and coming back for the next auction and to be interested enough to have an auction of their own. Commissions are always negotiated and never fixed! Fixing listing commissions or price fixing is a violation of Sherman Anti-Trust laws.

What are the best types of auctions?

Absolute auctions are the best because they attract the most bidders and attention. Attendees know that something is definitely going to happen that day more than likely and that the property will be sold to the highest recognized bidder regardless of what that price is. Auctions not advertised, as Absolute Auctions are reserved price auctions so that you are aware. Most auctions in general are reserve price auctions. So that you are aware we do not contract with any seller's that plan to set what we feel is an unreasonable reserve. Most times in fact the seller may even feel a bit uncomfortable with the reserve that they set as it may be more than likely way below a speculated market value. Setting reserves too high is a waist of time for everyone including the seller, the audience and the auctioneer. You can count on reasonable reserves if you go to a Vestport Inc. auction or we simply wouldn't be doing it. Also there may be a Subject to confirmation which is used in a case where a high bid is near the reserve but the reserve has not quite been met. In a case like this the seller will be asked if they want to accept the lower offer or not and in many cases a transaction can be completed even if the reserve is not met. There are many ways to get the job done and get good deals.

Important:

Vestport Inc. is a traditional commercial/residential real estate company first and foremost. We buy, sell, lease properties and specialize in financial analysis consulting services for commercial real estate. Our auction service is simply one more venue that you should consider to accelerate the sale of your property. Just as in the traditional real estate profession no one can ever tell you accurately exactly what a property will sell for. Only the final sale price can dictate true market value. Anyone who claims an exact sale price is doing his or her client or potential customer a great disservice.

Part of our service fee may include some or all of the following services that we do in house depending on the particular property and potential audience.

• Design of print advertisements
• Custom web pages and online advertising
• Basic still photographic services
• Basic video services
• Development and implementation of a solid marketing plan
• Coordinating security, parking and signage
• Registering bidders and buyer's representatives
• Weekly progress reporting to the seller/client
• Answering all bidder questions regarding the auction in advance
• Hosting Auction Open House previews etc.

Some properties will require more advertising and some will require less than what is mentioned above and this list is only a basic example. There area many more things that we typically do for any auction but many of them we consider trade secrets and are not included in this list.