Can a Property Be Bought Before the Auction?
by Brian Kuzdas
Brian Kuzdas, Founder and CEO of RealEstateAuctions.com
When we’re in an open house and a buyer asks us, “Can I buy the property now?” We always answer with, “Of course you can!”
Real estate auctions offer a great platform to get the most money for the seller because it groups the market to a one-day event where bidding gets increased with back-and-forth competition.
As a company, and even an industry, we really do not want the property to sell before auction. We know the seller will most likely benefit the most with an auction where ego and emotion come into play versus intellect. There’s something about the human spirit that has this need to be competitive, which typically drives the price up for the seller. At the end of the day, the seller still has to make the final decision. If an offer comes in prior to the auction, as Realtors, we have to present all offers, and if a seller wants to take that offer before the auction, we have to abide by what the client wants.
In this scenario, all terms of the auction are still in place. The buyer signs the same auction contract, the buyer’s premium still exists along with the property being sold as-is. Typically the buyer has 45 days to close the transaction allowing them to get financing, although the transaction is not contingent on getting financing.
Auctions create urgency for buyers, inducing them to make offers prior to auction. They fear that when the property goes to auction they may get outbid, so at least 10% of all auctions, we get offers prior to the auction event from buyers. It comes down to the seller wanting to accept the pre-auction offer. Just like buyers, sellers sometimes make the decision to accept that offer not knowing if anything better is going to come in at the auction.
It’s a game of chance for both parties. For the buyer, do I bid a premium now before the auction to induce the seller to take the offer, or do I wait for the auction event? For the seller, do I accept that offer today or do I take what’s behind curtain number two? Sometimes there’s a great surprise waiting if the seller can hold off, but then again, it could turn out to be a dud. A bird in the hand is in front of the seller. Do I take this offer now or do I wait to see what else I can get at the auction?
Regardless, it’s always fun and exciting to see it all play out. What an exciting way to sell real estate!
Brian Kuzdas is the Founder and CEO of RealEstateAuctions.com. Brian is based at company headquarters in Silicon Valley, California, where he is building a team of auctioneers and auction-focused real estate specialists to cover all 50 states. Reach Brian via email at BKuzdas@RealEstateAuctions.com.