BOSTON HERALD - Bidding for Success

A seller has the option of two types of bids: "absolute," which means the property simply goes to the highest bidder, or "reserve," which means the seller has specified an amount that the bid must not go below.
Absolute auctions attract the most buyers hoping to land a great deal; however, most auctions are reserve auctions.
There are advantages for the buyer in an auction as well. The buyer avoids negotiating hassles and broker's fees and also sets the price he wants to pay.
"In private treaty brokerage the seller sets the price, the buyer sets the conditions," said Manning. "Whereas in an auction it is completely opposite: the seller sets the conditions, usually 'as is' with only a title contingency, and the buyer sets the price by being the highest bidder."
Auction companies provide a "bidder's packet" on each property which may include floor plans, lot dimensions, a septic system inspection as well as a Home Inspection Report.
It will also include essential information such as the terms and conditions of the sale, the auctioneer's disclaimer, other costs -- such as a "buyer's premium" - and a sample Purchase and Sale agreement.
A bidder is expected to bring a "down payment" to the auction, which, for the highest bidder, will later be used toward the payment of the sale price.
"Auctions are the ultimate form of appraisal," said Manning, "it is the people who actually decide what a property's fair market value is."
Even though Salloway did not get exactly what his house had been appraised at, he is satisfied with the outcome of the auction. "I liked it because it was a participatory experience," he said.
Manning attributes the increase in the use of private party auctions to a better-educated public. "Historically, auctions had a 'distress' connotation to them," he said. "Now they are seen as a function of the marketplace."
Important tips...
* Visit the house more than once.
* Most houses are sold "as is" (with a title contingency); even if the seller has done an inspection, it may be worth it to have your own inspection done.
* Ask the auction company if there is a "premium" over and above the price of the house or any other costs.
* Hire a broker to help you (most auctioneers offer a broker incentive) and get help in learning how to assess a property's true value.
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