Baltimore Real Estate Auctions - Auction Information

BALTIMORE REAL ESTATE AUCTIONS

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BALTIMORE REAL ESTATE AUCTION INFORMATION

Don’t even think about selling your Baltimore real estate without reading this information first. I want to give you truthful and helpful information that will help you decide the best way to sell your property. Make sure that you are making an informed decision when you decide to auction your property.

Thanks to Tracy Sutton from the Baltimore Examiner for featuring auctioneer, Robert Kaetzel and this website in an article titled, “The ins and outs of selling your real estate at auction”.

Right now the Baltimore real estate market is slow and many auctioneers are failing to bring adequate prices at auction. This presents a big problem as many times the seller has invested thousands of dollars in advertising for the one day event. Some auctioneers will put you under pressure to accept the auction price whether you like it or not.

Your property needs to be the right candidate for a real estate auction. Don’t find yourself in the unfortunate and embarrassing position of spending 30 days preparing for an auction, spending thousands of dollars in advertising and ending up with an unsold property or much worse, being pressured in front of the auction crowd to “do the deal”. Learn about real estate auctions before you call any auctioneer to get their advice and opinions.

robert_kaetzel My name is Robert Kaetzel and I am a real estate broker and auctioneer in Maryland. I have been in the real estate business for 13 years and I have personally sold over 1,200 properties. My company Real Estate Professionals, Inc. is a major player in the Baltimore real estate market. Our company handles the sale of hundreds of properties every year. I know what you are thinking, who cares? I agree.

WHAT DOES THIS MEAN TO YOU?

Actually nothing. You can’t judge the quality of advice that you will get from someone by the amount of business that they handle. The best way to find a quality auctioneer, real estate agent or broker is to ask for references. Ask for testimonial letters from satisfied clients and names and phone numbers of clients that you can call. Many people in my business are successful. They are successful in only doing the first transaction because the client will never use them again. Use your own good sense in deciding if someone’s advice sounds logical and truthful. My goal in creating this website is to explain to you in detail how real estate auctions work so that you understand enough to make the right decision for yourself. Of course I hope you will choose me to evaluate your real estate but that’s your decision to make.

Lets first start with the very basics.

What are the reasons why some sellers are choosing the auction method to sell their real estate?

Many property owners are not that familiar with real estate auctions. When they hear an auctioneer hype the benefits of a real estate auction some think they have found the magic bullet.

An auction can benefit you as a seller in a number of different ways. If you have a desirable property, the competitive bidding situation of an auction sale can bring a market value or above market value price at terms favorable to you.

BENEFITS OF A REAL ESTATE AUCTION

Typical auction terms that are favorable to the seller include:

As-Is sale: The property is sold in as-is condition and the seller will not have to worry about making inspection repairs or making the property condition acceptable to a mortgage lender.
Large deposit: The buyer will place a large earnest money deposit to seal the deal. Deposits are negotiable, but are typically between 5-10% of the sale price. The chances of a buyer default are lower with a higher deposit.
No sale contingencies (home sale, buyer financing or property inspections)
Buyer typically pays all transfer and recordation taxes which are customarily split equally.
Settlement to take place within 30-45 days from the date of the auction.
The auction sale eliminates numerous and repetitive showing requests.

NEGATIVES OF A REAL ESTATE AUCTION

Some of the negatives associated with real estate auctions are:

Advertising costs: Most auctioneers will charge advertising fees up front and they are non-refundable. You pay all advertising costs regardless of whether the property sells or not.
Since the sale terms are favorable to the seller, the property may sell for less than its market value unless the property is very desirable and unique.
An auction sale is advertised and conducted on a single day at a single time. Your best buyer may not be available or may not go through the trouble of attending the auction and bidding. You have one shot to get it right or you have wasted your time and advertising money.
Since the property is sold as-is, your buyer may not be able to arrange mortgage financing to close the sale.
An auction sale may take 30-45 days to advertise and conduct and 30-45 days to finalize. An aggressively priced property can be listed by a real estate broker and may be able to be sold immediately and settled in 30 days with terms similar to auction.
The auctioneer may still be entitled to a commission even if the buyer defaults on the sale.

IS YOUR PROPERTY A PROPER CANDIDATE FOR A REAL ESTATE AUCTION?

Many people think that auctions are only for distress situations. While auctions can be the right vehicle for a motivated seller or distressed property, many sellers are using real estate auctions to get the true market value of residential, commercial, multi-family real estate and land. The type of properties that sell well and receive the highest prices at real estate auction in the Baltimore area are:

Unique Properties (historic, one of a kind, landmark, unique design)
Demand Properties (neighborhoods without a large supply of homes for sale, desirable neighborhoods, desirable trophy homes)
Commercial Real Estate (retail, office, industrial, development opportunities)
Multi-family Real Estate (apartment buildings from two units to apartment complexes)

Just because you have one of these types of properties to sell does not mean that you will do well.

WHAT AUCTION COMPANY SHOULD I DEAL WITH?

There are many choices that you have when it comes time to select a real estate auction company. Let’s be totally honest here, I want you to deal with me but let me tell you something that might surprise you. When I evaluate real estate for auction there are many times that I recommend another company. I have found that total honesty is my best sales tool and it is one of the reasons why I do well in the real estate business. If I don’t think that I or my company can get you the highest price, I will recommend another company who can get you the highest price.

UNETHICAL DEALINGS AT AUCTION

Unfortunately in every business there are people who cut corners and bend the rules. Here are some of the ways that you can get screwed whether you are buying or selling at auction.

Phantom Bidding

A phantom bid is not real. It is illegal and unethical and probably pretty common. A phantom bid is where an auctioneer increases the price of the property for sale but the auctioneer does not have a real bid to justify the increased price. Most auctions are public sales to the highest bidder. When an auctioneer ratchets up the price of the real estate without having a real bid, fraudulent activity occurs. Unfortunately, it is very difficult to spot phantom bids. When the sale is over the crowd breaks up. Since there is no paper trail until a contract of sale is signed, some shady auctioneers think that they can call phantom bids with impunity. Some auctioneers may also have a “shill” in the crowd whose sole purpose is to drive the price up or drive the price up to the “reserve price”. The shill is not a real buyer and is not prepared to buy the property even though they are bidding on it. We will not engage in phantom bidding and we will never knowingly refer you to any auctioneer who engages in this highly unethical practice.

Failure to Disclose Material Facts or Defects

Some auctioneers think that when they advertise a property to be sold as-is they have no duties to give negative information about the property to a buyer. The law holds auctioneers and real estate brokers responsible for disclosing material facts or defects about property that they are selling. A material fact or defect is something significant enough to affect a buyer’s decision to buy or not buy. For example, a Baltimore row house is auctioned as-is. The buyer completes the sale and later discovers that the property was subject to eminent domain and is being acquired by the City. Another example would be the sale of an apartment building in Baltimore City where the building is not legally zoned for the appropriate number of units. If this information was known prior to the sale, it must be provided to the buyer. If you are thinking that as a seller you don’t want this type of information provided to the buyer, think again. You might think that once the deal settles then you are done, but months or years later you will probably be served with a lawsuit and have to pay thousands of dollars in attorney fees to defend yourself. We take disclosure responsibilities seriously and follow the letter of the law to protect you. Even if you as a seller follow the law and your auctioneer or real estate broker does not, a court may find you responsible under the premise of vicarious liability. When you hire an auctioneer to act as your agent, you could be held responsible for any errors or omissions caused by the person you hired.

Agency Violations

The auctioneer at an auction sale is typically acting as an agent of the seller and represents the seller’s best interests. This is a common practice but many buyers don’t realize that they have no representation at a real estate auction. Auctioneers need to take care that their agency role is disclosed and that they do not intentionally or unintentionally represent both the buyer and seller by their actions.

LEGAL ISSUES WHEN SELLING REAL ESTATE AT AUCTION

Contract of Sale Failure to Protect the Parties

Many auctioneers use very simple contracts that are short, sweet and to the point. While I think this is a good idea, Various provisions in Maryland law require certain notices and language in a contract of sale. Failure to include the required language in a contract of sale can subject the auctioneer and possibly the seller to civil or criminal liability.

In Baltimore City, when you sell real estate other than a one or two family property, you must provide a zoning transfer certificate with the contract of sale. This law provides that when a seller fails to attach the zoning transfer certificate to the contract of sale that, the seller “is conclusively presumed to have represented and warranted that the property involved in the transaction is being used in compliance”. This is obviously a very negative situation which could leave you exposed for a lawsuit relating to the zoning of the property after settlement. Auctions are not exempt from this law.

In Baltimore City, a single family property must be offered to the current tenant or previous tenant if the property has been tenant occupied within 6 months of the sale date. The Tenant’s Right of First Refusal law applies to auction sales. Failure to comply with the law is a misdemeanor criminal offense.

I don’t want to scare you. I just want you to understand that there are many issues that need to be addressed prior to the auction sale so that you have limited your liability as much as possible. An auctioneer will smile when they sell your property and they receive their commission check, but will they answer your calls when their failure to protect your interests subjects you to a lawsuit or a criminal charge? Lawsuits are not funny and they happen more often than you might think. When someone feels they got a raw deal in a real estate transaction, they may sue everyone involved in the transaction. A serious Circuit Court lawsuit could subject you to a choice of a judgment against you or paying $10,000, $20,000 or more in legal fees just to defend yourself. Many auctioneers and real estate brokers have errors and omissions insurance that will cover them in a lawsuit. The buyers and sellers in a real estate transaction are typically on their own with regard to defending themselves in a lawsuit.

Here is a checklist of things to think about before buying real estate at auction

Read the auction advertisement word for word and understand the terms and conditions of the sale

Verify the zoning and use for the property? Is the use of the property in compliance?

Am I responsible for any liens, back water bills, legal fees?

What is the maximum price that I will pay at auction?

Is there any premium being charged to the buyer?

What is the exact dollar amount of closing costs and transfer taxes that the buyer must pay?

Am I able to obtain financing for the property if necessary?

Who is responsible for the property between sale and settlement?

Are all parties to the ownership of the property available to sign the contract of sale?

If you intend to take title to the real estate in the name of a corporate entity, has that entity been legally formed and will the contract of sale reflect that entity as the purchaser? Will you need to sign the contract as a corporate officer, member or stock holder?

Is there any indication that the property may have hidden and/or major defects that the seller will not reveal? Has there been any recent work done to a property that might cover up a problem? Should a professional inspector be consulted?

What are my responsibilities if I default as the purchaser under the contract of sale?

REAL ESTATE PROFESSIONALS, INC. AUCTIONS

Real Estate Professionals, Inc. can market and sell your real estate using the auction method. Since Real Estate Professionals, Inc. is a real estate brokerage company and auction company, we can provide your property with greater marketing exposure. We bring all of the benefits of traditional real estate brokerage and combine this with the benefits of the auction method of selling in order to get you the highest price possible. Many traditional real estate companies know how to market a property effectively and cooperate (share commissions with each other), but aren’t able to create demand or create a sense of urgency. Many auction companies know how to sell a property, but aren’t able to effectively market a property to get top dollar (market value) for it. Real Estate Professionals, Inc. uses the best techniques from both traditional real estate brokerage and auction to sell your property effectively and for a fair market value price.

Not every property is right for auction. Some auctioneers and auction companies will take any property with any chance of selling because they only offer auctions (to a hammer, everything looks like a nail). I take time to assess your situation and evaluate your property before recommending a real estate auction. Many times we recommend selling the property through traditional real estate brokerage only because this may be the way to get the highest price for you. We will be honest with you and give you a written evaluation of your real estate along with our professional opinion all at no cost to you. You see, I don’t believe in ramming a solution down your throat. I have discovered that there is no one system to sell every property. Every property is unique and needs a custom marketing plan to sell it for the highest price. A good auctioneer or real estate agent should bring marketing ideas to the table. I consider myself a marketer first and a real estate broker/auctioneer second, I use many different creative techniques to sell your real estate. I am known for my clever and unique advertisements for the properties that I choose to sell.

If you are thinking about selling real estate located in the Baltimore area, I would like to talk with you about the possibility of working together. If you have real estate to sell you need someone who you can trust. Not a company, but one person who will be your point of contact and who will be responsible for seeing that things go right for you before, during and after your sale.

Robert Kaetzel, Broker

Certified Real Estate Auctioneer

Real Estate Professionals, Inc.

410.916.8200

robert@baltimorerealestateauctions.com

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LINKS

Here are some links to some of our favorite websites.

National Auctioneers Association

Headquartered in Overland Park, Kansas, the National Auctioneers Association (NAA) represents the interests of almost 6,000 auctioneers in the United States, Canada and across the world. The mission of the NAA is to promote the auction method of marketing and enhancing the professionalism of its members through education and technology.

robertkaetzel.com

This is my personal website where my Dad and I promote our real estate business. The website also explains our business philosophy and how using our services will benefit you.

Real Estate Professionals, Inc.

Real Estate Professionals, Inc. is a premier real estate brokerage company in Baltimore, Maryland. Robert Kaetzel created Real Estate Professionals, Inc. so that serious real estate agents could develop their own professional real estate practices. Robert D. Kaetzel is the broker of Real Estate Professionals, Inc. and Robert’s Dad, Bob Kaetzel is a real estate salesperson affiliated with the company. May of the agents affiliated with Real Estate Professionals, Inc. have the Certified Auction Associate, CAA designation to indicate competency in evaluating and marketing auction properties.

Certified Real Estate Auctioneer, Robert D. Kaetzel is a REALTOR® and licensed real estate broker in the State of Maryland* with over thirteen years of experience in real estate marketing and a track record of personally selling over 1,200 properties in the greater Baltimore area. Robert manages the auction sales division of Real Estate Professionals, Inc. along with his Dad, Certified Real Estate Auctioneer, Bob Kaetzel.

Many of the sales agents affiliated with Real Estate Professionals, Inc. have the Certified Auction Associate, CAA designation, which is a new designation created by Real Estate Professionals, Inc. to indicate competency in evaluating and marketing auction properties. A Certified Auction Associate from Real Estate Professionals, Inc. can advise you about selling your real estate at auction and make professional and unbiased recommendations to you.

“Certified Auction Associate” and “CAA” are service marks of Real Estate Professionals, Inc.

*Maryland does not license auctioneers; however some jurisdictions in Maryland do require auctioneers to be licensed. In areas where we do not currently hold an auctioneer license, we work in cooperation with an auctioneer licensed in that jurisdiction.