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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

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Managing Auction

Listings on the MLS

James Harrison, RCE, CAE

President and Chief Executive Officer

MLSListings Inc

auctions a real estate perspective
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
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
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
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
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
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

Proposed Auction Disclosure and Search Fields

  • Available in an upcoming software release