What is a Residential Property Auction?
In many ways, selling residential real estate in the Lehigh Valley through an auction is similar to marketing and selling
your property with a local real estate agent. In preparation for the auction, the property needs to be marketed on the
internet (in the local Multiple Listing Service, etc.), in print advertising (newspaper adds, etc.) and possibly
radio, TV, etc. The most significant difference is that there is a proposed pre-determined Sale Date that is part
of the marketing materials.
What is an Absolute Auction?
The presence of the word "Absolute" is a very significant signal to buyers familiar with buying real estate in an auction.
Once the auction starts or opens for bidding on the property, the word "Absolute" means that the property will be sold
to the highest bidder on that day when the auction on that property stops or closes.
The benefit is that an Absolute Auction will generally draw a bigger audience because the buyers believe that the property
will be sold that day no matter what the highest bid may be. For the owner there is no guarantee that they will get
what they need to pay-off an existing mortgage. And buyers should know that in some cases, the auctioneer will choose
not to start or open the auction on the property, and the property will not be sold that day.
What is a Reserve Auction?
The most popular and generally held auction is a Reserve Auction. The marketing materials for this auction will simply
say "Auction." If the word "Absolute" is not part of the auction marketing materials, the property may be
offered (bidding is open) for auction, but not be sold that day. Generally, in a Reserve Auction there is a
minimum sale price set by the owner.
If the highest bid is not equal to or greater than the owner's set minimum sale price, the property may not be sold
that day. Once the auction starts or opens for bidding on the property, the auctioneer works to get the bidding to
meet or exceed the minimum sale price, however, the auctioneer will not generally announce "SOLD" unless the minimum
is reached.
What is a Sealed-Bid/Price Range Auction in Allentown, Bethlehem & Easton?
This type of auction is often conducted for the owner by a real estate agent. The agent markets the property and states
that the property will be sold on a specific date in the future. In addition, the marketing materials state that
sealed bids will be accepted in a specific price range, for example: $175,000 - $200,000 for the property.
Home Seller
What should Lehigh Valley Home Sellers expect in the Auction process?
The owner and/or real estate agent will need to…
- Interview the auction organizer
- Negotiate commission, marketing costs, etc.
- Sign a contract with the auction provider (fully aware of any contingencies that may be involved)
- Finish the transaction with a closing or settlement when the owner receives payment from the buyer for the property, signs over the deed to the new owner and gives the new owner the keys to the property.
Home Buyer
How should an Investor or Home Buyer prepare to purchase real estate at an Auction?
The buyer and/or real estate agent will need to…
- Determine if the property will be offered "as is" at the auction
- Prior to the auction, the buyer will need to decide whether to do inspections, etc.
- Identify a settlement company to research the deed, etc.
- Finish the transaction with a closing or settlement.
Can anyone buy a Residential Home at a Lehigh Valley Auction?
Allentown, Bethlehem, and Easton area investors, first time home buyers, etc. can consider buying a home at auction. Working
with an agent, who has auction experience, will be an advantage.
Buying a property at auction can be an exciting experience. However, the buyer needs to be disciplined and stick to their
original bid limit as pre-determined by their Comparable Market Analysis (house value) of the property.
The Auction Sale Time Line
The process to buy and take possession of a Residential property through auction may take between 5 days to 1 month.
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