Buying at Auctions

With the ever changing real estate market a centuries old process of buying and selling has resurfaced.  Buying at Auctions are becoming one of the most attractive ways to buy real estate no matter if it is your primary residence, vacation home, or investment property.  To many people in Chicago a real estate auction is foreign to their way of thinking regarding the purchase of their condo or home, but auctions have long been the primary means of buying real estate in other parts of the country, particularly the south.  Auctions are the relatively simple process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the winning bidder.  The definition above is the basic auction form but there are several variations, including time limits, minimum or maximum limits on bid prices, and special rules for determining the winning bidder or sale price.  Many times the participants may or may not know the identities or actions of the other bidders and they can participate in a variety of ways, such as by telephone, or internet. 

Buying at auctions can be confusing unless you are familiar with the three different types of real estate auctions available to the general public.   First, is the absolute auction which is what most of the public recognizes.  This type of auction usually guarantees a lot of buyer excitement and participation due to the property sells to the highest bidder, regardless of price.  Many sellers have begun to use this method since an absolute auction offers the best performance results of all.  The second type of auction is the minimum bid.  Auctioneers will only accept bids at or above the published minimum price.  This format reduces the risk for the seller if the seller wants a set price and will not sell otherwise.  The down side of this type of auction is a greater risk of setting an anticipated value.  The last form of auction is the reserve auction which many people have some difficulty understanding.  To make the definition as simple as possible the high bid becomes the offer, not the sale.  Reserve auctions do not publish a minimum price and the seller reserves the right to accept or reject the highest bid, usually within a specified time.  Sellers in this type of auction predetermine the sale price and are not obligated to sell other than at a price entirely acceptable to them.    

Buying at Auctions have been around a long time because they are an effective and efficient way to sell real estate and meet the needs of the public.  Auctions are entertaining and most people who have been come back again and again, so if you haven't yet attended an auction try it.  I guarantee it will not be your last.