Sellers Auction Information

Sellers FAQ's

Types of Auction Sellers

When we meet with a client or Seller we review the specific dynamics of the property or portfolios as well as the objectives of the seller, we then make recommendations as to the type of auction, marketing requirements, methods bidding or other disposition alternatives. We review with the Seller’s, their lenders, partners and other interested parties the goals, timing, market conditions and property characteristics and present options for the sale. One of the first things we try to do is predict “who is the buyer and how do we reach them?” While evaluating how to best meet these goals, we try to predict the buyer profile, where will we find the buyer and structure a disposition program that is comfortable for the Seller and yet create the “illusion of a bargain” motivating buyers to investigate the property and participate in the sale.

Methods of Offering Properties at Auction
  • Absolute or Without Reserve There is no minimum bid and the Seller is committed to sell the property to the highest bidder, regardless of price. We will generally use a “Suggested Opening Bid” to give an indication where the bidding will start, but remember, in an auction it doesn’t matter where the bidding starts, only where it ends! While an Absolute sale appears to be most risky, in reality it will bring out more bidders and creates more potential sale value for the seller.

  • Minimum Bid or Disclosed Reserve A Minimum Bid is disclosed, committing the seller to sell the property to the highest bidder either at or over the published Minimum Bid. As opposed to a traditional sale, if a Minimum Bid strategy is used, the Minimum Bid price should be set at a discount to perceived current market value in order to generate bidders to participate, buyers are looking for a bargain and will not participate in an auction or bid sale unless a “perceived” bargain is projected, even though in many case they will pay more than they initially thought they would.

  • With Reserve The seller reserves the right to accept or reject the highest bid. This method is perceived as being the safest, in reality it can be the least effective in that the buyers may not feel the Seller is “serious” about selling the property will wait to see if it sells at the auction and try to buy it at a greater discount if it does not sell. The goal will be to convey the seriousness of the Seller they will sell the day of the auction and create a “fear of loss” which will motivate buyers to “act now”!

Types of Auctions
  • Open Outcry Auctions Used where the buyers prefer to bid in person and will buy the property exactly under the terms of the offering. This strategy is selected when price is the primary consideration as to who buys the property. This exciting method much resembles a fine art or other collectable auctions that you may have experienced in person or on television. With the advent of the internet, on-line bidders can be brought in to participate in the open outcry auctions.

  • Sealed Bid Auctions In this type of auction bidders submit a bid on an approved real estate sales contract which is submitted with designated certified earnest money funds. The seller selects the winning bid which may be the highest price or a buyer the Seller feels can best perform and close the transaction. There is also the option to narrow the list of bidders and go back one or more bidders with requests for “highest and best offers” This type of auction is favored if there is a likelihood that the seller is interested in considering optional terms to purchase or there is more than one property being offered and assemblage can be determined by each bidder to meet their individual needs. Sealed Bid offerings are also effective when it is perceived that the depth of the buying universe is small and potential prices can be highly divergent.

  • On-Line Auctions On line auctions are simply another approach to an open outcry auction. An online bidding platform can be much like EBay or it can be in conjunction with an open outcry auction. On-line bidding is becoming more prevalent and widens the buyer universe where bidders can be located in any location and bid competitively with all buyers, either in an on-line only auction sale or in tandem with live auction event.  Multi-par Auctions – This is a process where large land parcels or dissimilar portfolios can be bid in a process “parts against the whole”.  Take for example a 500-acre land site, the highway frontage may have more value than the interior tracts.  Instead of looking for one solo buyer, multiple buyers can buy based on their usage requirements, resulting in higher gross value to the seller.

  • Simulcast Auctions An open outcry auction that is conducted in two or more bidding locations simultaneously allowing bidders in different cities or different countries to bid for the same property.

  • Hybrid Auctions Hybrid Auctions simply include elements of the various programs listed above providing the seller with the optimum approach to create additional bids for their property. Our objective is to achieve the overall objectives of our clients whether that is price, terms, or timing.

Bidding Methods
  • Traditional Bidding In a traditional auction, the auctioneer begins by asking for an opening bid and then the audience continues to escalate bids until the highest bidder is determined.

  • Dutch Auction Bidding In this method the auctioneer begins by asking for an opening bid at a highly elevated price, one they know is more than the value of property and keeps moving down until someone in the audience bids, the auctioneer will escalate bids until the highest bidder is determined. This is a method most effective when the auctioneer knows there is limited interest or few buyers for the property and will generally end the auction quickly.

  • High Bidder’s Choice In this style of bidding, similar properties are grouped on a display board next to the auctioneer. Bidders then bid for the right to select the property or unit of their choice from the available inventory. The highest bidder's choice is then removed and a subsequent round of bidding begins with the remaining properties. This style of bidding is most commonly used on the sale of new construction condominiums or townhomes or with commercial properties of similar value. The benefit of this type of format is to create greater competition from all buyers, vs. a unit by unit or sequential bid format, with buyers not knowing if the person next to them wants their desired unit or property.

  • Multi-Par Bidding Multi-Par Bidding is most commonly used on the sale of large undeveloped land where multiple parcels of land are offered. This method allows the bidder to place bids for various configurations of parcels based on the bidder's desire to assemble the parcels.

Types of Properties Sold
Over the course of more than twenty five years members of Paul A. Lynn & Associates, LLC have successfully been involved in the marketed and sale virtually any asset type of real estate, in many U.S. states and internationally including Canada, Mexico, and the Caribbean. Major categories include:
  • Residential New construction, condominiums (resort and urban), Co-ops, town homes, single-family homes, trophy homes, resort residences, penthouses, historic mansions, luxury estates, subdivision land, portfolios and home sites:

  • Commercial Multi-family apartments, office buildings, corporate campuses, office parks, senior housing, strip centers, malls, outparcels, C-Stores, NNN single user properties, leaseholds, subleases, restaurants, storage facilities, boat slips, and all other types of income properties. Properties can be vacant or occupied:

  • Industrial Factories, freight/transportation facilities, grain elevators, warehouse buildings, light industrial parks, development land, environmentally “challenged” properties:

  • Special Purpose Properties Schools, Government buildings, hospitals, churches, theaters, athletic facilities, private islands, air rights, manufactured home parks, parking garages, and marinas:

  • Hospitality Limited service hotels, full service hotels, bed-and-breakfasts, historic properties:

  • Vacant Land & Acreage - Development and investment land, raw acreage, farm land, recreational property, land leases, and timberland:

  • Governmental Agencies/Housing Authorities - As funding have been reduced from HUD and other sources, many of these Governmental and quasi-Governmental agencies are looking to sell surplus or unused properties to: a) Clean up portfolio b) Generate additional funds to provide services for their constituents c) Put tax exempt properties back into the private sector d) Reduce blight in urban area and rebuild neighborhoods.

  • Note Sales – Bank note sales, individual or portfolio of notes

Bankruptcy or Partnership Dissolution Auctions are excellent methods of bringing transparency to the sale of assets for the dissolution of a partnership or the sale of assets in a bankruptcy situation for the benefit of creditors who prefer not to take title to the asset but would rather sell it immediately at market value without assuming the liability of being part of the chain of title.
Trust and Estate Sales The duties of fiduciary or trustee include the following in the sale of an asset: Making the asset available to all who might have an interest in buying the asset, transparency of the transaction, having all bidders bid under the same terms and conditions. Many times in an estate situation there are tax consequences or different beneficiaries have divergent objectives in dissolution of the estate, sale of the real estate at auction is the solution for trustees to these important issues.
Divorce and Family Partnership Dissolution Unfortunately families go through trauma today that result in marital divorces or requirements for family businesses that have been around for years, to find ways to monetize the assets of the family or the business. Due to the potential acrimony and time considerations, auctions are an excellent method of bringing transparency to the sale of the assets and in some case can allow certain family members that want to retain the property while in turn finding the “true market value” in order to payoff other family members.
Non-Profit/Charity Donations Individuals today want to make donations to favored charities or other non-profit organizations and have appreciated real estate they can donate in lieu of making a cash contribution., In most cases the non-profit organization is not set up to manage real property and wants to monetize the donation as quickly as possible. Through the use of an auction the property can be sold and turned into dollars, with the contract or the title transferred to the non-profit where the donor can avoid complicated tax planning issues to the benefit of the receiving entity.  The IRS requirements relating to a Bargain Sale are a bit more complicated than a traditional sale, particularly as it relates to the valuation for the donor to be able to use the deduction.  It is important to the 501c3 entity and the donor to have good legal and accounting assistance to avoid issues with future audits and penalties.
Public/Governmental Entities In most state and public sector governmental entities there are strict regulations and statutes that require the entity to use some form of competitive bidding method for contracting and disposition of surplus property, including real property. A properly structured real estate auction program can assist the public entity in increasing exposure of the property and maximizing the value of the real estate for return of dollars to the taxpayers.


Paul A. Lynn & Associates, LLC

Real Estate and Personal Property

Disposition Strategies - Solutions


Paul A. Lynn, CCIM - Principal

406 Coachman – Houston, TX 77024-6401
Auction Line: 832.598.8BID (8243)
Fax: 832.201.9886
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