How to Sell a Property at Auction
Few real estate agents or brokers would advise trying to sell your property to the highest bidder at a one-day event, but there's no law against it. You may end up getting a better price selling it at an auction than you would at a listed price, and you may save yourself quite a bit of money and time as you're not dealing with maintenance and utility costs and responsibilities while waiting for buyers. The standard procedure for any type of auctions applies, but you do need to pay close attention to some legal details.
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Instructions
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Advertise the sale in at least one local newspaper. An ad in the classified section is cheaper, but with an ad in one of the other sections you could include a photo of the property. Be sure to note the exact time, date, location and a phone number if interested parties have questions. It is also important to note the minimum bid and state that all participants must sign in prior to bidding.
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Obtain the necessary legal documents. You can shop online, in the legal forms aisles of office supply stores, or you can consult a real estate attorney, which would be needed for the closing transaction. In an auction, it's a standard procedure for participants to provide their contact information ahead of time and sign a document that states they are legally obligated to make the purchase if they are the high bidder. Ask to see identification before they sign the form.
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Require participants to furnish a letter of credit from a lending institution as proof that they can afford the purchase. According to FrontDoor.com (See References) you could also require from each participate a certified check equal to about 10 percent of the expected sale price. Checks would be returned to non-winning bidders. The high bidder would forfeit the check if he is unable to close.
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Start the bidding. After each bid, call out a higher price to see if someone if willing to pay that amount, and so forth. The highest bidder wins. From there, it is up to you and the bidder and/or lawyers for either party to decide when the closing on the property will take place.
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Tips & Warnings
You should have an attorney involved in every step of this process, from organizing and advertising the sale, to the time money is exchanged and the title is transferred. You can also hire an auction company to handle the sale for you.
