I. Form of Auction
We recommend that we conduct a "hybrid auction". A "hybrid auction" combines the best qualities of a open outcry auction with the security and confidentiality of a sealed bid sale A hybrid auction works best for Residential & Commercial Real Estate with a large reserve or minimum price.
The hybrid auction requires bidders to present their initial bids in a sealed bid form. Initial deposit and acknowledgement; agreement of the terms and conditions of the purchase agreement are required. At a particular BID DEADLINE date, time arid location, the sealed bids are opened by the auctioneer and seller as they are received. Only those bids that meet the requirements of the auction sale may be considered. Once the bids are revealed, the seller then has the following options:
1. If there is one bid that is substantially higher than the remaining bids, and that bid is acceptable to the seller, they may end, the auction and execute the purchase agreement without farther negotiations;
2. If there are two or more bids that are at or near the minimum price, the auction proceeds to the second phase of the hybrid sale. The selected high bidders are then requested to participate in a open outcry auction with the opening bid being the high sealed bid. The open outcry auction continues until to conclusion whereupon the parties execute a purchase agreement.
3. All sealed bids are substantially lower than anticipated; in this unlikely event the auction is ended but, negotiations with the most likely buyers is commenced until an agreement is reached. The benefit of a hybrid sale is obvious - the initial bids are confidential. The seller then gets the benefit of an open outcry auction where the bidders are forced to compete against each other in person, with the assistance of the auctioneer and staff whose only job is to attain the highest bid price. A hybrid auction allows the price to be established by open and competitive bidding, creating true fair market value. Buyers are attracted to this type of auction and are assured of a motivated seller who is ready, willing, to deliver the property.
It is very important that a clear message by sent to prospective buyers that the seller no longer wishes to own this property and that the property will be sold.
Auction dates arc established by mutual agreement with the seller. We recommend I event be scheduled to end on a Wednesday or Thursday at 3pm. This will allow for participation by a wide-range of bidders. The date should be established a minimum of six to eight weeks in advance to allow the development of the necessary advertising, E- brochure, and due diligence packages. This also allows scheduled purchasers sufficient time to react and conduct any level of pie-auction due diligence they deem necessary participate in the auction.
Real Estate Broker Participation
The participation of the real estate brokers is important to the success of any auction. I always recommend broker participation.
We have conducted a wide variety of auctions throughout the State of Florida. We have developed a good working relationship with real estate brokers throughout the State. We include the real estate brokers and to encourage their active participation. Realtors are very supportive of our Auctions. We believe this enhances the auction process and generates a higher level of interest in you' Auction.
The success of any major auction is the result of a well-designed marketing plan. It is important that the residential / commercial property be presented to as many potential buyers as possible. To that end, market groups are targeted as end-user buyers. Several areas at critical to the success of this auction;
A. E-Brochure: We will create a one page, E- brochure that details the Auction Property. The E- brochure will provide a complete description of the Auction property and a comprehensive description of potential uses of the property and all amenities. The E- brochure provides Information including preview times and dates.
B. Due Diligence Package: The Auction & acknowledgement of purchase forms, order of sale information, and any other properties information not included in the brochure.
It is our policy to prepare a due diligence package that includes materials supplied from your file. Generally, it will be inclusive of the following documents:
- Copy of property boundary summaries (survey)
- Copy of current tax assessments from Broward County, Fl
- Copy of current real estate tax bills
- Copy of current Rental Agreements
- Copy of Floor Plan
- Detailed description of all amenities and improvements of the property.
- Proposed title insurance policy
- Copy of proposed form of contract of sale
- Terms and conditions of auction
The above package will be developed and packaged for the property and will be E-mailed to any prospect that makes a request free of charge.
III. Terms and Conditions
We recommend that the real estate be offered using a cash contract “SOLD AS IS”. The only contractual contingency is that the seller must provide good and insurable title, free of all liens and encumbrances. The property will be offered "as-is” requiring the buyers to inspect prior to auction. In addition, bidders will be required to supply a cashier's check or certified check in an amount to be determined in order I submit a sealed bid and/or to register to bid.
It is suggested that an auction day deposit be required from the top bidder that equals to (10%) percent of the contract price to make certain that the buyer is serious and that ii contract will close. Because we require a deposit of this significance, typically all of it properties we sell close. Our contract indicates that in the event the buyer fails to close for any reason, the deposit is forfeited. In the event of any forfeitures of deposit, it divided equally between the seller and auctioneer, after all advertising has been reimbursed to the Auction Company & or Seller.
Premium is collected from the buyer and is payable at the successful closing. The buyer's premium has been successfully used on hundreds of auctions, and has been accepted well within the marketplace. For this auction, E.A. Donahue, Inc. shall retain the buyer’s premium as its commission.
As discussed, all costs cost o the sale would be the responsibility of the buyer(s). Therefore, a closing costs including documentary stamps & Title Insurance. Real Estate Taxes are prorated to date of closing.
The auction process is incomplete until the real estate contract closes and the proceeds of the sale are received. Part of our function is to coordinate closing with your title company. Following the auction, we communicate with the purchaser to make them aware of the closing agent and the date they are scheduled to close. We recommend the contract provide for a thirty (30) day close for the property being sold.
A good method to create a larger the pool of potential buyers is to offer financing if possible.
Please call for a personalized proposal.