Paul A. Lynn & Associates, LLC

Real Estate Disposition Strategies - Solutions   

 

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Buyers FAQ's

Q. Can I make a Pre-Auction offer?

Ans. Yes, you can make a "pre-emptive" offer to purchase prior to the auction; the goal of the seller is to sell the property before, at or after the auction. Realize, the Seller has made a commitment to sell the property and the "Suggested Opening Bid" or "Minimum Bid" price that is published may be substantially lower than the Seller's target price. If making a pre-auction bid, present your HIGHEST and BEST bid and it will be submitted to the Seller OUTSIDE of the auction bidding process. All Pre-Auction bids will be submitted to the seller for consideration IMMEDIATELY and are Subject to Seller Confirmation however, the property will continued to be marketed as part of the auction and if the pre-auction offer is accepted, the property must close before the scheduled auction date.

Q. What types of properties will be sold at this auction?

Ans. All types of commercial, residential, and special purpose properties can be sold in an auction. Whether you are a first-time home buyer, looking for a second or vacation home, commercial user or a real estate investor, the Paul A. Lynn & Associates, LLC auction program offers a wide variety and selection of properties, all at auction prices! Properties ranging from single family homes, trophy homes, condo units (urban and resort), multi-family, office, retail, hotels, industrial, development land and more!

Q. Who owns the properties that are being offered at the auction?

Ans. These properties may be owned by lenders, insurance companies, controlled by special service providers, private investors, REITs, trustees, governmental entities or any other type of ownership entity. Any type of owner may offer properties in our auction programs. The seller has made the commitment to sell the property through the Paul A. Lynn & Associates, LLC auction program in order to expedite the sale. For any number of reasons the sellers want to accelerate the sale of their assets and use the auction to accomplish such. Be sure to register and attend the auction to take advantage of the fantastic bargains available to auction bidders.

Q. How were the values determined? How current are they?

Ans. In many cases the properties have been offered previously in any number of venues, generally for sale under a traditional brokerage basis. The sellers have chosen to use the auction format to expedite the sale of the property and it will be up to the auction bidders to determine pricing. There may have been previous appraisals, recent asking prices, tax assessments or broker opinions of value. The auction is the BEST method for finding today's current market value in a competitive bidding environment.

Q. Should I go inspect the property prior to bidding at the auction?

Ans. Yes, absolutely! No two pieces of property are exactly the same: the only way for you to make an informed decision when it comes to bidding and buying is to not only visit, view and inspect the property prior to the auction, but also read and review the Bidders Information Package (which you are required to obtain in order to bid) and any property information and disclosure documents pertaining to that property. Generally our auctions have a number of scheduled dates when you and any of your professionals can do your investigations. These are also times when representatives from Paul A. Lynn & Associates, LLC will be available to answer questions about the property and the auction process. You are highly encouraged to attend multiple on-site inspections or bidder seminars. By registering and bidding at the auction, you are representing that you have not only viewed the property prior to bidding, but have also inspected, reviewed and accepted all relevant property information you deem necessary to make an informed decision. When you bid at the auction you are bidding on a no-contingency Agreement and the properties will not be open for further inspection after the auction so be diligent and do your inspections and investigations prior to the auction.

Q. Can I conduct inspections after the auction?

Ans. No. All inspections and investigations must be completed prior to the auction event. For each auction event there will be published scheduled on-site viewing dates for you to view the properties. The properties will not be open for inspections after the auction. Land parcels can generally be viewed independently and we may ask you to provide a Waiver of Liability before entering the site. Additionally, we may conduct bidder seminars when you can meet representatives from Paul A. Lynn & Associates, LLC, obtain Bidder's Information Packages and get an overview of the auction event.

Q. Can I bring a contractor with me during inspection?

Ans. Yes! Contractors, engineers, lenders, partners, architects or any other professional that you feel worthwhile in helping you make an informed buying decision at the auction are welcome to accompany you.

Q. What do I need to bring to one of your auctions?

Ans. If you plan to bid and purchase a property at the auction, you must have:

  • A cashier's check (made payable to you or a designated escrow agent as stated in the auction brochure and auction rules). The amount of the cashier's check will vary depending on each particular property. These amounts can range from $1,000 to several hundreds of thousands of dollars, depending on the property being offered. If there are multiple properties or units being offered in the auction event, you will need a separate check for each property you intend to buy.
  • Personal checks will NOT be accepted at the auction, except to pay additional deposit that may be required if you are the successful bidder. Generally, additional earnest amount ranging from 8%-10% of the Contract Price will be due to the escrow officer 3 - 7 days after the bid is accepted.
  • Valid photo identification for all parties involved in the transaction, issued by a government agency (driver's license, passport, etc).

Required cashier's check amounts vary per auction, please reference the specific auction details and terms and conditions for required amounts.

Q. What is the difference between a cashier's check and an official check or bank check and why must I have a cashier's check on auction day?

Ans. The terms "cashier's check," "treasurer's check," and "official check" are often used interchangeably. A cashier's check is a draft where the drawer bank and the drawee bank are the same. In other words, where the check is drawn by a bank on itself. If so, and if it is not captioned "expense check" or "dividend check" or "payroll check" or in any other way that makes it a special-purpose payment, consider it as fitting the definition of a cashier's check and making the funds available accordingly. A cashier's check has availability requirements defined under Reg. CC. and that is why a cashier's check is required as part of the Earnest Money Deposit.

Q. Do I need any experience to bid at one of your auctions?

Ans. No...Bidding is simple and registering as a bidder is FREE! Whether you are a first timer or an auction veteran, come to the auction, explore and ask questions. Our staff will be happy to assist you in any way they can. After a few properties are auctioned and sold, you will see for yourself how easy the process is and be ready to bid yourself. We also conduct "Bidder Seminars" at on-site inspections or other time to help familiarize you with the method and pace of bidding that the auctioneer will utilize.

Q. Do I need to register to bid at the auction?

Ans. Yes! But registering is free and easy. We recommend that you arrive at the auction venue about an hour before the scheduled start of the auction. You will be asked to show your personal ID and cashier's check in order to register and provide access into the auction venue. You will hold your check and if you are the successful bidder for any property, you will endorse your check to the escrow agent and be escorted to the contract area.

Q. Where are your auctions held?

Ans. Generally we hold our auctions in ballrooms of a major hotel in general proximity to the property being sold. In some case where we are selling commercial or special purpose properties we may hold the auction in a major city that allows buyers easy access to a major airport. In some rare cases we may hold the auction on site of the property being sold but this will generally be contingent on the property having an area that provides a comfortable physical environment. You can schedule an auction date but you can't control the weather elements outside!

Q. What if I have a real estate agent or broker?

Ans. Paul A. Lynn & Associates, LLC Group welcomes broker participation! The commission for each auction varies and the broker will need to review the offered co-op brokerage fee for each auction. The commission will be paid based on the Winning Bid Amount, and will be paid by the Seller to Registered Brokers/Agents whose client(s) successfully purchase a property and close escrow. To qualify, make sure your broker or agent completes the following steps:

  1. Pre-Register with The Paul A. Lynn & Associates, LLC Group as a "Registered Broker" at least 48 hours prior to the Auction Day. In order to register the broker/agent must submit a letter, sent by FAX or emailed in pdf format signed by both the broker and the client indicating the broker is acting as their agent. (If you are a salesman, letter must be signed by authorized broker/broker manger).
  2. The agent must have a valid real estate license that allows us to pay a commission.
  3. The agent must physically attend and register with the buyer at one of the scheduled on-site inspections or bidding seminars.
  4. The agent must register with their client(s) at the Broker Check-In on Auction Day.
  5. Escort their client(s) as Winning Bidder to the contract area to sign auction contract.

Please see the Terms and Conditions in regards to agent/broker participation for a full explanation.

Q. May I attend to just watch?

Ans. Yes. However, Registered Bidders will be granted access before the general public. If we are nearing room capacity, we will have to restrict attendance to Registered Bidders only. We cannot violate fire and safety codes. Seller and Auctioneer reserve the right to limit access to the auction venue and anyone disturbing the auction or soliciting at the auction may be asked to leave.

Q. How long will each auction last?

Ans. That depends: Generally, if we are selling residential properties we are able to auction 15 to 25 properties per hour. If commercial property is being sold the pace may move a bit slower in that the value of the property requires longer bidding rounds. The length of each auction is dependent upon how many properties and the type of property being sold at the auction that day. Please allow yourself sufficient time to attend our auction event so that you are able to take advantage of all the opportunities presented on auction day.

Q. Can I purchase more than one property at this auction?

Ans. Yes, however, if you are planning to purchase more than one property, you must register as a "Multiple Bidder" and do the following:

  1. Be prepared to have appropriate Earnest Money Deposit checks required for each of the property(ies) you plan on purchasing.
  2. If an Absolute sale the Seller may restrict any one buyer for Absolute units being purchased.
  3. Show the ability to purchase the properties.

* The required cashier's check amounts vary per auction, please reference the specific auction details and terms and conditions for required amounts.

Q. What is the Buyer's Premium and what is it used for?

Ans. A Buyer's Premium* will be added to the high bid price to determine Contract Price, which the buyer will pay at closing. This Buyer's Premium varies both from auction to auction and may vary for properties within the auction. Generally Buyer's Premiums in Paul A. Lynn & Associates, LLC auctions range from 3% - 10% depending on auction and Seller's objectives. For example, if the Winning Bid Amount is $200,000 and a 5% Buyer's Premium is used, then the Buyer's Premium would be $10,000 (5% of $200,000). The Total Purchase Price is then calculated as the Winning Bid Amount + the Buyer's Premium, or $200,000 + $10,000 = Total Purchase Price of $210,000.

The Buyer's Premium is used to help the Auction Company/Broker promote the auction and to help defray the auction expense costs without having to pass on all of those costs to the Seller. It is a standard practice utilized by most major auction companies.

*Remember: A Buyer's Premium will be added to establish the Total Purchase or Contract Price.

Q. What is the Earnest Money Deposit?

Ans. The Earnest Money Deposit is the amount of money you are required to put down on auction day. On auction day, you must deposit with the escrow/closing agent an Earnest Money Deposit equal to an amount designated in the auction brochure or auction rules. This amount may vary in an auction based on unit or property, please know the required Deposit for each property you are interested in bidding on. Upon winning the bid you will be required to endorse your cashier's check to the escrow agent. This Earnest money is a "hard" deposit immediately upon conclusion of the auction. Within 3-7 days after the auction you will need to increase additional Earnest Money Deposit with the escrow agent to an amount equal to 8% - 10% (see auction rules) of the Total Purchase Price (bid price plus Buyer's Premium). This is a NON-REFUNDABLE deposit and will be credited to the buyer at closing.

For example, if the Total Purchase Price is $210,000 (the Winning Bid Amount PLUS the Buyer's Premium), and the Earnest Money Deposit required on auction day was $10,000 then you would endorse the cashier's check to the escrow agent and increase that amount and submit to escrow agent an additional $11,000 (total or $21,000) within 5 business days following the auction.

Q. How can I pay the Earnest Money Deposit?

Ans. The initial designated Earnest Money Deposit must be paid by cashier's check or cash at the auction (and a cashier's check for each additional property purchase). The remaining balance must be provided to the escrow agent by cashier's check or wire transfer within 3-7 days of the auction. You will be provided with a receipt on auction day showing that the escrow/closing agent received your Earnest Money Deposit. There are no exceptions to this requirement. Credit cards and personal checks will not be accepted.

* The required cashier's check amounts vary per auction, please reference the specific auction details and terms and conditions for required amounts.

Q. What if my Earnest Money Deposit required is less than the required cashier's check?

Ans. The designated Earnest Money Deposit must be paid in the form of a cashier's check or cash (additional cashier's check for each additional property purchase). Change will not be given on Auction Day. One suggestion is to bring multiple cashier's checks in various denominations (i.e. $1,000, $2,500, $5,000, etc increments) which can be combined for required deposit(s). If it is less than your required down payment, you will be refunded or credited the difference at closing.

* The required cashier's check amounts vary per auction, please reference the specific auction details and terms and conditions for required amounts.

Q. What if I buy more than one property, what is my Earnest Money Deposit requirement?

Ans. If you buy more than one property you will need the required Earnest Money Deposit for each property you purchase. The Earnest Money Deposit must be paid in the form of a cashier's check or cash.

* The required cashier's check amounts vary per auction, please reference the specific auction details and terms and conditions for required amounts.

Q. What is Bidder's Choice Bidding?

Ans. In some of our auctions where we have similar types of property for sale (multi units condos, lots, homes or commercial properties of similar price) we will create groups that will be presented on an Availability Board. At the beginning of each round you will bid for the right to select from any of the properties on Availability Board. These groups may be 5, 10, 15 or more properties. At the completion of the round of bidding the high bidder will be able to select from any of the properties being offered at their high bid price and the property will be moved to "Sold" board. After the conclusion of that round of bidding the auction will reconvene with a new pool that may be changed or adjusted as the auction continues. When you are attending on-site inspections you should prioritize your desired properties/units so if you don't get your first choice you may get your 2nd, 3rd or 4th choice. The advantage of Bidder's Choice bidding is you can have options for your selection based on price, layout, location or any other personal choices that are important to you!

Q. What does it mean if a property is being sold Absolute, Minimum Bid or With Reserve?

Ans. Properties will be offered and advertised whether they will be sold Absolute, subject to a Stated Minimum Bid (or reserve price) or Subject to Seller's Reserve. A property being sold "Absolute" will be sold to the highest bidder at the auction, regardless of price. The Seller will sign the contract at the auction and the closing will take place in accordance with the terms of the contract. A property sold "Subject to Stated Minimum Bid" will be sold to the high bidder for any price at or above the Stated Minimum Bid price. If the auction bid is below the Stated Minimum Bid price the Seller has the option of accepting or rejecting the bid either at the auction or within 2-10 business days after the auction. Properties sold "Subject to Seller's Right to Accept" are a reserve offer and the Seller has the right to accept any bid made at the auction within 2-10 business days after the auction. If the Seller rejects the bid the high bidder's Earnest Money deposit will be returned. In our auction programs some portion of the portfolio may be offered under any or all of the three offering categories. Be sure to listen to the auctioneer who will announce before, during or even after the bidding how the property in that round of bidding is being offered.

Q. If I am the winning bidder, can I assign my contract to someone else?

Ans. No. The purchase agreements are not assignable. All parties who wish to buy must be present on auction day (or have provided limited Power of Attorney to someone to act on your behalf) so that they can register for the auction and execute the necessary documents if you win. In some cases arrangements can be made to allow phone bidding, so long as bidder has completed certain deposit and contract requirements. Contact Paul A. Lynn & Associates, LLC representatives for requirements and details.

Q. What if I change my mind? Can I cancel the transaction after the fact?

Ans. No! Once the auctioneer has announced "Sold!" you have agreed to purchase the property. There is no rescission or "cooling off period". That is it why it is important for you to conduct all of your due diligence and inspections prior to auction day and bidding on the property. Please review the auction terms and conditions for further information.

Q. Do you publish auction results?

Ans. No. As the broker in the transaction representing the Seller, Paul A. Lynn & Associates, LLC is prohibited from disclosure during escrow. Once escrow closes, you may be able to obtain the information from local MLS or the County Recorder's Office.

Q. Are there any liens on the property?

Ans. No! The sellers provide insurable title to the properties sold at auction. You will receive a standard Seller's "Title Policy" as part of your transaction and may have the option to upgrade the policy, for an additional cost. Please review the purchase agreement for further details.

Q. Can I choose my own Title Company?

Ans. No, Seller chooses Title Company. Closing costs are standard and customary for the area and county in which the property is located.

Q. When will I receive title to any property I may purchase?

Ans. The closings are expected to occur within 14-45 days of the auction event. At closing, and upon payment of the purchase price and closing costs, you will receive insurable title vested as you designated to the closing agent. Please review the purchase agreement for additional information.

Q. How do I get financed if I'm the winning bidder?

Ans. We are in a very unusual time as it relates to real estate financing. Rates remain at historically low levels, however, the ability to obtain financing through traditional methods have proved difficult or elusive. Depending on the type of property being offered, we attempt to create relationships with financing resources that have pre-approved the property being auctioned and are available for confidential discussions with potential auction buyers to determine their qualifications for a potential loan. YOU ARE NOT REQUIRED TO USE PREFERED LENDER! In some auctions the existing loan may be assumable (based on borrower qualifications). We also may be working with a Seller or Lender/Seller that is offering Seller financing. You should also consult with your personal banker to determine if they will provide required financing. REALIZE THE PURCHASE AT THE AUCION IS NOT CONTINGENT ON YOUR OBTAINING FINANCING. You should have your financing options determined prior to bidding at the auction. Financing will not allow you to extend or delay closing pursuant to the auction purchase agreement.

*Any Seller financing programs will be outlined in the Bidder's Information Package.

Q. What if I want to use my own lender?

Ans. You are always free to use your own lender! In some auctions where Seller financing is being offered, we may offer a discount off the bid price if you buy for cash or with an outside lender. Please see the auction terms and conditions and review the purchase agreement so you are fully informed.

Q. Can bidders provide their own financing?

Ans. Yes, but the sale will not be contingent upon financing, escrow closing will not be contingent upon financing, nor will escrow closing be extended for that purpose.

Q. What are the closing costs?

Ans. The Standard and Customary charges for the county in which the property is located in, which may include escrow fees, recording fees, normal pro-rations, lenders title insurance premiums and fees, loan fees, document processing fees, document transfer taxes, and homeowners association dues. See Bidder's Information Package for specific information on closing costs.

Q. Can the auction property be used for a 1031 Exchange?

Ans. Yes, auction sales and properties are a great vehicle for fulfilling the very restrictive time requirements under IRS 1031 Exchange regulations and statutes. Because the date of the auction and closing are set in the auction contract, the buyer can feel confident they can complete the Exchange within the required timeframe. In the event either the buyer, seller or both are using an exchange, any additional cost or requirements of the exchange will be borne by the appropriate party.

Q. Can I use my ATM/debit card of Credit Card for the deposit?

Ans. No, only cashier's checks or cash can be used to register for the auction.

Q. Can I bid if I am not a US citizen?

Ans. Yes, anyone can bid! The registration and bidding process are the same for all bidders. However, there may be some other requirements for foreign nationals purchasing properties, subject to appropriate federal, state and/or local statutes and regulations. It is recommended you consult with your own legal counsel and an auction representative to determine if there are any additional requirements.

Q. What happens if properties that don't sell at the auction?

Ans. The goal of the Seller is to sell the properties whether it before, at or after the auction. In the event a property or portion of the portfolio doesn't sell at the auction current "ask" or list prices will be noted on the Paul A. Lynn & Associates, LLC web site at www.palccim.com. Your best price opportunity will be at the auction, in many cases post auction pricing may be 10% - 30% higher than the auction prices.

Q. I may not be interested in one particular auction program, how can I be notified of your future auction offerings or events?

Ans. On the Paul A. Lynn & Associates, LLC web site at www.palccim.com there is a place where you can register to be notified about upcoming auctions. You will be asked to provide contact information and to indicate what type of properties and what geography (location) you would like to get notifications on our future auction events.

Q. Can the contract be put in my corporate name?

Ans. Yes, you can put it in the name of a Trust, partnership or corporate entity. To do so, you must fax in your entity formation documents to 832-201-9886, prior to bidding on the property or provide appropriate entity information and documentation at the contract area at the auction.

Q. What documents are required for Corporations?

Ans. Articles of Incorporation, By Laws, and Resolution authorizing the Corporation and party signing Purchase Agreement to act on behalf of Corporation in this transaction.

Q. What is required for Limited Liability Companies (LLC)?

Ans. Articles of Organization, Operating Agreement, and Resolution authorizing the LLC and party signing Purchase Agreement to act on behalf of LLC in this transaction.

Q. What do I need to put it in a Trust?

Ans. Declaration of Trust and evidence that party signing contract is Trustee of the Trust.

Q. What is required for a Partnership?

Ans. Partnership Agreement and evidence of authority of party signing contract.

 






Paul A. Lynn & Associates, LLC





Real Estate Disposition Strategies - Solutions

 

Paul A. Lynn, CCIM - Principal

7500 San Felipe, Suite 600 - Houston, TX 77063
 
Email: Paul@palccim.com
Auction Line: 832.598.8BID (8243)
Main Office: 713.914.8055 - Fax: 832.201.9886
 
2011 Paul A. Lynn & Associates, LLC