Auctioneers must be licensed by the state in which business is conducted. The exact license requirements vary from state to state, but most require the auctioneer for a house auction to also hold a real estate or broker's license or work under a broker's direction. A host of auction administrative procedures must also meet state standards. The auctioneer and the auction house set the general rules for the bidding action and payment during a house auction.
House Inspection Prior to the Auction
Auctions typically offer houses "as is," without warranty or guarantees that heating, cooling or electric systems are in working condition. The auction house or the residential listing agent may hold open houses to allow potential bidders an opportunity to inspect the house and assess its condition. Serious bidders may bring home inspectors and contractors for the opening to examine the systems and note repair requirements and damage.
Interested bidders must register prior to a house auction. Registration may be completed a week or more in advance to allow the auction house or real estate agent time to assess the credit worthiness of potential bidders. Auction houses may require interested bidders to bring a letter of loan pre-approval as a condition of registration. Monetary deposits may also be a condition of registration, depending on the estimated value of the home. A deposit ensures that only bona fide buyers participate in the bidding. Deposits are usually in the form of a certified or cashier's check.
A minimum bid may be set prior to the auction to ensure the lender or owner receives adequate funds to cover a mortgage loan and costs associated with the auction process. In extreme situations, a home may be sold without a set minimum. This may be done when the home is abandoned or the home value is minimal.
The auction house sets the amount of bid increases. The goal for both the auction house and seller is to obtain the most for a property, so the auctioneer may call for the set amount of increase, but may accept a lesser bid, if no other bidding takes place.
Remote and Absentee Bidding
Most auctions allow remote bidding by telephone, provided the bidder is registered with the auction house and has met any deposit requirements. Absentee bidding is also typically allowed. Absentee bids provide the auctioneer with a set amount that may be bid on behalf of the absent person. As the bidding progresses, the auctioneer, or a representative of the auction house, stands in to represent the potential buyer.
Payment and Financing
Auction rules vary for payment or the time required to obtain a mortgage on the house. Some auctions specifically state that cash must be used to complete the transaction. If a loan is allowed, a time limit is established to complete the closing. Beyond this time, the winning bidder defaults on the transaction and the property returns to the original owner. The winning bidder may also lose any deposit and be responsible for the buyer's and seller's premiums. A premium is an additional fee, above the bid, paid to the auction house.
- 20 of the funniest online reviews ever
- 14 Biggest lies people tell in online dating sites
- Hilarious things Google thinks you're trying to search for
- Texas Department of Licensing and Regulation: Auctioneers Administrative Rules
- "How to Become a Real Estate Agent"; Pamela Gray and Jennifer James; 2007
- Elite Auctions: How to Bid at Our Real Estate Auctions
- Albany County Department of Management and Budget, New York: Real Property Auction
- Hudson & Marshall: Real Estate Property Auctions