How Do Real Estate Auctions Work?
My parents are trying to repurchase land (39 acres) that was owned by the family. It was sold about 2 years ago, and now the people who bought it are selling it – or actually, they are auctioning it (this is in Ohio). We can’t seem to get a lot of information from the realtor or auctioneer about how this all works. Is there a site that I can go to that gives all the ins and outs, the laws, how it works, etc? Also, the land is being divided into 4 sections (my parents are going to bid on one sections). Each section is going to be auctioned, but then, they are going to do a seperate auction for the whole property. If the bid for whole property is higher than what each section was bidded for, then it cancels out those bids for individual sections. This doesn’t seem fair. It seems it should be one way or the other. Any thoughts on this? Also, is there usually a reserve price? My mother was told there wasn’t and she is pretty much having to guess how much to get a loan for based on what one acre is worth right now. Also, is there a certain amount of money that they have to bring to the auction – like 5 or 10%? One more question, the current owners tried to get it so that my parents could just purchase the section they want, and then auction the rest seperately, but they were told they can’t do that? Is this true, and why?
The subdivision thing is legal since it is spelled out.
Your parents need 10% of their bid in actual cash at the auction. They need to pay the other 90% within 30 days or they will face criminal charges. This is a done deal, there is no backing out, no excuses about obtaining funds.
There is a reserve, there always is. If for some really weird reason their isn’t (like a local law against it) the owning bank will send a shril there. This person will place the reserve price as a bid, making sure the winning bid is not below what is acceptable. They do not care if they win, they have insurance already to make sure the loss is covered.
Your mother needs to count on the reserve being between 85-90% of the FMV of the land.