CORNERSTONE REAL ESTATE & AUCTION CO., LLC
1. What is an auction?
An auction, held either “live” held in a public forum where bidders personally attend, or online (all bidding is done electronically from remote locations), or a combination of both forums, is a method of disposition of assets where the assets are sold to the highest bidder. Anyone in the crowd, or online, who is willing to pay the most will be able to purchase with the asset. Auctioneers market their sales to draw the most buyers (that are qualified) so the assets will sell for top dollar.
2. Why do people sell at auctions?
The auction method has been around since 500 B.C. Sellers choose the auction method because, through competition among bidders, the assets sell at or above current market value and it is a time-proven method to determine the actual true market value for an asset.
3. Does anyone get bargains at auctions?
Yes, there are bargains to be had from time-to-time, but remember, the buyer sets the value of the asset and what it is worth to them. The auction method is truly the only way to establish the actual, fair market value of an asset. For instance, for real estate, certain comps may demonstrate the value of a particular parcel of real estate when compared to similar properties that have sold or are currently for sale. A buyer though may put more value on a particular parcel of real estate as it fits their particular needs at that time in their life, or that that auction is the only time to acquire ownership of that particular parcel of ground. We see this a lot of times in farm ground auctions, family properties, or when family members want to purchase a property next to their relatives.
4. I've never been to an auction. Where do I find them?
Look in your local newspaper for auction listings. Check out online ads for auction companies, email blasts, or social media posts. Look for traditional roadside signage advertising upcoming auctions.
5. How can I find out about buying a specific type of merchandise at auctions?
From real estate to restaurant equipment, from antiques to agriculture, auctioneers maintain traditional mailing and emailing lists for many various asset classes. Contact auction companies in your area and ask to be put on their contact list for the asset class(es) you're interested in.
6. What can I do if I'm confused or intimidated about buying at auctions?
Follow these guidelines to become a confident auction buyer:
1.) Attend auctions and get a feel for the pace and speed of how they run and what to expect.
2.) Contact the auctioneer hosting the auction and ask what to expect.
3.) Get pre-qualified for any financing that may be needed in purchasing real estate or high-value assets like automobiles, equipment, etc.
4.) Conduct research on values for the assets you are interested in.
5.) Go to the inspection/open house dates and inspect and review the assets.
6.) Order inspection(s), survey, and/or an appraisal for real estate.
7.) Drive the vehicle if you can, start up the motor, plug the item in, test the item, if permitted to do so.
8.) Don't be intimidated by other bidders (sometimes other bidders will try to intimidate you, such as glaring at you, to get you to stop bidding on the items they want).
9.) Stick to the price you set, and don't bid more than you intended to. Remember, you set the value for the asset!
10.) Keep track of each item you buy, including a brief description, the lot number, and the price you paid. Remember to calculate the buyer's premium and taxes, if applicable, so you won't be surprised at the cashier's table.
7. Why does the auctioneer “talk” so fast and what the heck is the auctioneer saying?
Auctioneers use an auction “chant” often called “bid-calling” or “crying” to drum up excitement of the bidders, announce what the current bid is and what is being asked for, and to keep the auction timely moving. The auctioneer will often use the structure of “I have $5.00, asking for $6.00” and different variations of this format. If in doubt of what the current bid is and what is being asked for, seek the assistance of the one of the bid assistants (“ring person”) and ask this person what the current bid is and what is being asked for.
8. Why should I buy at auctions?
At an auction, consumers are assured of buying at the fair market value, because not only do they have a say in setting the price, they can get the items they want for just one bid over the next interested party. Additionally, auctions offer a wide selection of merchandise, including many valuable or unique, one-of-a-kind items not available elsewhere.
9. What is “fair market value”?
Fair market value is the price for which an asset will sell on the open market between a willing buyer and a willing seller, neither being forced to buy or sell as of a specific date. Since auctions are the purest form of free enterprise, where the laws of supply and demand prevail, fair market value is the price that an asset will fetch at a well-advertised auction.
10. What types of assets sell at auction?
All types! Auctioneer, Justin R, Wall has sold vacant land, building lots, single-family homes, multi-family homes, commercial buildings, farm ground and other similar real estate. He has also sold everything from miscellaneous household items up to valuable antiques, guns, farm equipment, motor vehicles, campers, etc.
11. What determines whether my assets(s) is/are a good candidate for auction?
The most important factors are your motivation to sell and the marketability of the asset. The ideal candidate would be a motivated seller who owes less on the asset than what the current market is expected bring. Factors such as condition, location and amenities are also key. Most of the time, an auction is one of the best ways to efficiently dispose (sell) assets. Especially if there are a large number, variety, or rarity of assets.
12. Can I auction real estate that has a mortgage, taxes or liens owed?
Yes, most sellers have a mortgage and/or other liens on their property. You have until the closing to pay off any outstanding debts and provide insurable title to the successful bidder. Most of the time, the mortgage(s), liens or taxes are paid off at the closing table.
13. What do you mean by “insurable title”?
If a title insurance company will insure the property at closing, you have completed your obligation to the buyer. All Cornerstone real estate auction offerings are sold with good, insurable titles and no liens, judgments, mortgages or back taxes. If the title cannot be cleared, the down payment is refunded to the buyer.
14. Are there different kinds of real estate auctions?
Yes, auctions can be "absolute," "subject to confirmation," with “reserve," or with a "stated minimum." Cornerstone only sells real estate “subject to confirmation”, which means the the highest bidder at the real estate auction has won the right to enter into a sales contract with the seller. Seller has then seven (7) days to accept, reject, or counter the buyer’s offer.
15. How does Cornerstone get compensated for its services?
At our real estate auctions the buyer will pay a buyer’s premium that gets added to the “hammer” price, which is the price the auctioneer announces that the real estate has sold for. At personal property auctions, the seller pays a commission to Cornerstone and the buyer will also pay a buyer’s premium which then gets added to the “hammer” price.
16. What is a buyer’s premium?
A buyer’s premium is a percentage that is added to the “hammer” price, which is the highest accepted bid amount. For example, let’s say a piece of real estate has the highest bid at $100,000 and there is a 10% buyer’s premium in place. Then the total sales price is the “hammer” price of $100,000 plus $10,000 for the buyer’s premium for a total sales price of $110,000.
17. What is the usual timetable for a real estate auction?
Typically, our marketing plan calls for a 28-day window of time pre-auction to effectively market your real estate. The same would go for personal property, but we can also do 21-28 day windows depending on the seller’s needs.
18. What type of marketing campaign will you use to sell my property?
At Cornerstone, we utilize a large number of marketing channels to communicate the sale of your asset. Those channels can include the traditional channels such as printed media, i.e. newspapers, flyers, postcards, banners and signage. But also, includes social media advertising such a Facebook, Google and Tik Tok ads. For specialty asset classes, additional printed media channels maybe utilized such as collector magazines, trade brochures, etc.
19. Where is the actual real estate auction held?
Depending on the location and type of property, we will either conduct an “on-site” auction at the property or an “off-site” auction inside a public facility like an Elks lodge, conference room or hotel ballroom suitable nearby. We will do a free site analysis for us to determine which would be a better auction environment for your specific circumstances.
20. I have not seen a real estate auction before. Can I come to an auction just to watch?
Absolutely, we encourage anyone to attend and watch the bidding. You will be entertained and amazed at the process. Best of all, it's free!
21. How do I know whether potential buyers are qualified to buy my real estate?
At Cornerstone, we utilize a number of methods to try to ensure a qualified buyer is purchasing your real estate. When registering for auctions, we acquire the buyer’s driver’s license number and contact information. If they are the successful bidder, they are required to put 10% down as earnest money. They also sign all the contract documents acknowledging they are buying the real estate according to the terms of the sale and are legally bound by those terms and conditions. No one may participate unless they have properly registered. The buyer then has normally 30 days to close and if they fail to do so, their earnest money is forfeited.
22. Will I sign an agreement if I decide to sell my real estate or personal property at auction?
Yes, you will sign an auction contract provided us. If you would like to review a standard copy of our contract before signing, we will furnish one upon request.
23. What paperwork will I need to provide if I decide to sell my real estate?
Cornerstone would like to have copies of any available documents pertaining to your real estate, such as the deed, the survey, the tax ID number, recent tax bills, and/or inspection reports. If you are acting as a Personal Representative, Guardian, or Power of Attorney, we need that paperwork, or any court paperwork reflecting your authority to contract. We also have paperwork for you to fill out, which we will use to describe the real estate in our brochures and ads.
24. Will potential bidders be able to view the real estate prior to the auction?
Yes, we typically host two “open houses” or inspection dates for potential buyers to come in and preview the real estate. Also, we coordinate private showings of the real estate and any inspections that potential buyers may line up. For personal property auctions, we have at least one inspection date for buyers to review the assets. Buyers can also schedule private inspections as well.
25.) What can I expect on auction day for a live auction?
Cornerstone utilizes the best auction professionals including the auctioneer, clerks, bid assistants (“ring men”) and others to carry out the auction. We also provide all the equipment necessary to conduct the auction, plus maintain backup equipment to try to accommodate any issues that may arise on auction day. At the start of the auction, we cover all the terms and conditions, and record them introduction (for real estate auctions). Once the auction begins, the auction team will work with the buyers to obtain the highest possible price. Immediately following the sale of the real estate, contracts will be signed, down payments will be placed in escrow, and you will be on your way to closing.
26. What is a “bid assistant” or “ring man”?
A “bid assistant” or “ring man” is a staff member, usually one of the auctioneers not currently selling, who watches the crowd for bids. They are extensions of the auctioneer and aid the auctioneer in recognizing bids. It is often difficult for the auctioneer to see all the bids coming from a large crowd; the bid assistant listens to the “chant” of the auctioneer and scans the room for the current bid. If a bid assistant yells out “yup,” the auctioneer knows that he has the current bid being asked for and will proceed to ask for the next bid.
27. Where does the bidding start?
At Cornerstone, bidding starts wherever the bidders want to start it. As a seller, it is important to remember that setting a minimum starting bid is not essential, because it is where the bidding ends that is important. The auctioneer will always try to get the bidding started at a realistic level, but if there are no bids, he will drop down to a lesser amount and repeat this process until the bidders begin bidding.
28. When and where does the closing take place?
Cornerstone recommends 30-day closings. However, sometimes a seller opts for 45-day or 60-day closing for their real estate. The closing is usually conducted at a local title company.
29. Is the closing different from any other real estate closing?
Nope, the closing process is the same. The main difference between a traditional listing sale and the auction method is how the purchase price is achieved. Once the auction is over, Cornerstone works with you, the buyer, and the title company to arrange for the closing in the customary manner.
30. What happens if the high bidder fails to close?
Cornerstone immediately notifies the backup bidder in order to secure a new purchase & sale agreement. Additionally, the buyer will forfeit their earnest money.
31. What is “high bidder's choice,” and when is it used in a real estate auction?
Assets that are similar in nature (such as residential lots or farm ground parcels, or asset types: group of hammers, stack of dishes, etc.) may be sold using the high bidder's choice method. The auction is conducted to achieve a high bid, then the high bidder may choose any or all of the lots in the group, each at that high bid amount. For example, if the bidder chooses three lots, the high bid is multiplied by three. This process is repeated until all lots have been auctioned.
32. What does “multi-par” auction?
In many farm ground auctions, there are a 2 or more parcels being offered for sale. Typically, the auctioneer will solicit individual bids for each parcel and keep a running total. The auctioneer will then solicit combination bids of those parcels and keep a running total. Whatever combination produces the overall highest value is the winning combination, subject to seller’s approval.