The pros and cons of auction property for sale

Posted by highstreetauction on September 27th, 2016

There are the many constraints in the sale of auction properties as it is completely related to legal issues, and more than two parties are involved in this along with bankers or financial institutions.  Therefore, only authorized people or companies are allowed to deal with such properties.  In fact, auctioneers are allowed to sell and deal with such properties on behalf of the sellers.  They need to prepare the document and should sign the memorandum of the sale and should possess the contract agreement establishing the same on behalf of the contractors.  Some of the must to have features are diligence, disclosure, accountability, loyalty, and obedience.  One of the most prominent features of the agreements provides rights to the auctioneers all the power to fetch highest price for the said property.  Therefore auction property for sale is not as simple as it may appear. 

Auction property sellers by and larger represent sellers and they provide extensive services to sellers so that they can fetch highest price for the said property in the market.  They adopt different types of bids as and when required.  The minimum bid is one of the options followed by the companies, where it is announced in advance that below that limit property is sold to bidders.  The next and most important feature of auction is known reserve action.  In this particular action the seller of the property reserves the right to sell the property to whosoever he wish irrespective of the highest bid he may get from the auctioning of the property.   This amount of reserve is not a minimum amount but it is not disclosed to the market.  In this method the seller is obliged to pay a non disclosed amount as commission to carry on the bidding and auctioning of the property but he/company reserves the right of selling highest bid without even mentioning the reason behind the decision.  Thus, in this type of auction seller held all rights to sell his property to whomsoever he wants.

There is another clause called leap of faith which occurs when auctioneer and seller both cannot predict the market price.  When there is uncertainty about the price, when there is unfavorable situation, when they cannot decide over price, but the auctioneer fee will be paid so that he can cover the cost of auction. 

Apart from all these features, the rules and regulations may vary from state to state from province to province.  Sometimes written rules and regulations even though exists, customary rules also play enough impact on the auctions.  Therefore, demographic changes need to be considered by and large.  Favorable periods are also selected to announce auction of particular property. 

However the cons of the auction is that there are all chances of fraudulent bidders, confusing advertisements about auction, denial highest bidder, and discrepancy in the bidder registration practice.  Therefore all these features calls for proper check and one has to ensure before appointing the companies to carry out auction process. 

About the Author:

The writer is an expert in the field of Online Property Auctions with focus on Auctions For Property