"California Real Estate Auction Listing Agreement"
Managing Auction Listings on the MLS James Harrison, RCE, CAE President and Chief Executive Officer MLSListings Inc Auctions – A Real Estate Perspective In California, auctioneers are bonded by state Controller’s office, however no license is required CAR opinion: Auctions could be included in the MLS if: A valid listing agreement exists A list price is entered (starting bid price or range is OK) Unconditional compensation is offered Some degree of agency is in place for the duration of the time the listing will be on the MLS. Otherwise, auction listings could appear in a separate section of the MLS, such as a bulletin board. Research – The Auction Business Is Unique The major types of auctions are: Absolute – No minimum bid and the property will be sold to the highest bidder the day of the event. Minimum Bid – The minimum bid is published in advance and a sale will not occur unless the minimum bid is reached or exceeded Reserve – The reserve price is not published, and the seller may not be willing to accept less if bidding does not reach that amount. However, seller may accept less than reserve. Auctions have a language of their own: Crier – the auctioneer Gavel/Hammer price – the accepted final bid (going, going, gone) Buyer’s premium – auction company fee automatically added to bid Research - Sale Price Recording May Vary When adding a “buyer’s premium” what is sale price? The 5 Title companies contacted varied in their practice regarding including a buyer’s premium in the reported sale price. 1 would include it 2 may include it 2 may break it out Two county tax assessors said they use reported contract sale price as transfer value, but reserve the right to reassess. MLSListings currently uses “contract sale price” MLS Rules Adjusted To Provide Listing Guidance Auction rules were added to the section on Estate Sale, Bankruptcy and Lender Approval Listings Auction listing requirements: Clearly identify it as an auction listing Specify auction type: “absolute or reserve” Specify if seller has minimum bid price How participants/subscribers can represent a bidder Compensation to be paid to the participant representing the successful bidder When/how potential bidders may inspect the property MLS Rules Adjusted… (continued) If the seller will accept a purchase offer prior to the scheduled auction, these are additional requirements: Must specify the compensation to be paid in the event of a pre-auction sale Remarks must state that: The property is available for showing Purchase offers may be submitted prior to the auction, specifying any time requirements If an offer is accepted prior to the scheduled auction, there will be no auction 3 Commonly Asked Questions How is list price determined? Usually price in listing agreement. We use the minimum or opening price, if there is one; otherwise a challenge if none exists (absolute auctions) How is the offer of compensation expressed? Currently no exceptions for offers of compensation What disclosures are necessary? Public remarks – Identified as an auction; date & place; inspection availability, material facts In private/agent/confidential remarks – Commission details, how to represent a bidder Listing With Inadequate Auction Disclosures Minimal Information Absolute Auction With Required Disclosures Disclosures In Remarks Reserve Auction With Required Disclosures Disclosures In Remarks Minimum Bid Auction With Required Disclosures Disclosures In Remarks Proposed Auction Disclosure and Search Fields Available in an upcoming software release