AUCTIONS: WHAT’S A NO AND WHAT’S A GO

Below are some tips and tricks for brokers and agents to help their customers navigate auctions. While they are permitted in the Southeast Florida Multiple Listing Service, make sure auctions are in compliance with the MLS Rules. When in doubt about auctions (buying or selling), always consult with experts – a REALTOR® member, attorneys, and tax professionals.

AUCTION GOS:

• GO the full mile and do your due diligence:
  • Research the official records of the county in which the property is located. Search the court dockets as well for any litigation (pro tip: you can usually find both on the clerk of court’s website). Things to look out for – liens, lis pendens, mortgages, final judgments.
  • Make sure to provide consumers with the listing information available to you. This could include but is not limited to: property conditions; auction house information; bidding and auction terms; and, comparables.
  • If the property is in a trust, ask for the Certification of Trust under Stat. §736.1017 and a copy of the deed (and any other proof the trust has been funded) if the deed is not already recorded in the official records of the county in which the property is located.
• GO get information on the process so there are no surprises – to you or your customer. Things to consider:
  • Auction types (whether it is a foreclosure, lien, government owned, etc.).
  • Financing options.
  • Which lenders are willing to work with auction sales.
  • How deposits work and whether there is a cancellation period.
• GO into the transaction with the end goal in mind. Keep the maximum bid amount top of mind and budget for unexpected costs. While a buyer may have one budget in mind, auction properties may require repairs, inspections, title work, or other challenges.
• GO schedule and conduct an inspection. If available and time permits, conduct an inspection on preview days (if the property has them). If not, then try asking for one.
• GO to an attorney and conduct a title search. Make sure to do a title check to ensure that the property is free of any encumbrances, or at a minimum, know what they are to make sure it is a viable deal.

AUCTION NOS:

• NO, you should not trust everything you see online. Always verify! If it seems too good to be true, it probably is.
  • If you are working with an auction company, make sure it is reputable.
  • Check the auction company’s BBB profile and online reviews that provide customer feedback on the legitimacy of the company and its services.
  • Check federal and state court dockets for pending litigation.
  • Ensure that the auction house is appropriately licensed and insured.
• NO, you should not assume the auction property can be financed using a traditional mortgage. Before placing a bid or paying a deposit, make sure you and your customer understand how the buyer will ultimately complete the purchase of the property. And if the deal falls through, know how the buyer gets their deposit back.
• NO, you should not go into a deal without a budget. Set out a budget – that way your customer does not bid more than they are prepared to pay. Always have the bottom line in mind before bidding.
• NO guesses. Do not assume the property is in good condition or move-in ready. Latent defects may surprise you. Try to get inspections done on the property. Otherwise, this could tank a deal.
• NO cutting corners. Do no skip title searches. If the property is encumbered by legal disputes, title issues, liens, foreclosures, or code violations, it may affect the ability to purchase, lease, renovate, repurpose, and/or sell the property.

RESOURCES:

• MIAMI REALTORS® Toolkit – AUCTIONS: WHAT’S A NO AND WHAT’S A GO
• MIAMI REALTORS® Auction Listings resource
• NAR® Real Estate Auctions Consumer Guide
• MLS Rules