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What to do when the auction fee is added to the negotiated sales price?

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moh malekpour

Elite Member
Joined
May 25, 2002
Professional Status
Certified Residential Appraiser
State
California
The property was REO sale, listed in MLS for $519000, sold for $415000 after 165 days but the county record shows the sales price at $436000. The agent says the sold price was $415000 but the property sold at auction and they added 5% auction fee to the sold price. So, the property after 165 days of market exposure gets and accepts an offer for $415000 but since it was under auction term, they added 5% auction fee to the sales price and recorded the sale price at $436000.
The listing agent tells me the negotiated sales price was $415000 and that is why he puts that amount in MLS but the price that the buyer paid was $436000.
Which one consider the actual sales price, $415000 or $436000?

It seems that since the property was under agency contract, they let the agents solicit the buyer and when they secured a willing and able buyer, they sold the property in auction becaue the property was also under auction term and since it was an auction sale, they added the auction fee to the negotiated sales price. This sounds a little confusing and odd to me. Has anyone seen this kind of transactions? I am thinking to by pass this comp although I like to use it.
 

Bama Bayou

Senior Member
Joined
Oct 19, 2006
Professional Status
Certified General Appraiser
State
Alabama
The price is what the buyer paid. No different than a sale with a standard commission. We don't deduct the commission. Sales price is $436,000. I have seen hundreds of these transactions just during the last two months. Very typical for auction sales to add a "buyers premium" of 5 to 10 percent to the bid price to arrive at the sales price.
 

Michigan CG

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Joined
Nov 1, 2006
Professional Status
Certified General Appraiser
State
Michigan
The buyer knew he/she would pay the 5% when they were bidding. $436,000 is the sales price in my opinion.
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
Maybe I am dense this morning but why was it auctioned when it sold through MLS after 165 days on the market?
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Some of the auctions here are now listed in MLS ahead of time to help draw as many potential buyers as possible. Auctioned properties have had their exposure time on the market.
 

Ray Miller

Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
Buyers Premium

I have two auctions for RE coming up in June, in July I have a 8 store front/22 apt units building and at a resort a large number of vacant lots.

The two and June and the Apt/Store front are all being sold at “Buyers Premium” that is the 10% commission is being added to the selling bid. The buyer therefore is pays say $100,000 plus and additional $10,000 to buy the property a $110,000 for the real estate. The real estate agent and I are splitting the commission, the seller is pay the marketing cost of several thousand dollars, and it a real estate agent or broker brings a buyer to the auction and they buy they will get .75% of my commission and .75% of the brokers commission from the 10%.

On the lots they are selling for 10% but the seller is paying the commission. Yet the buyer then pays the full high bid price for the lot or lots.

So I would say in your case the selling price is the high bid plus the “Buyers Premium” after all that is what the buyer paid and it sold for. This is becoming a very popular way to sell at auction. I have (no brag, just fact) six more coming under contract using “Buyers Premium” this summer and fall.
 

Ray Miller

Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
One of our MLS SCWLS has established an auction section now, my listing will appear under that heading. Many auctioneers and auction companies do not work with licensed brokers or agents. There sales never make it to the MLS and have to researched at the township or court house offices.

Here in Juneau County this month there are 9 RE Auctions and many lake front condos slated to be sold some time in late July and Aug, that are not on the MLS. Got to starting watching this in all the research for comparable sales and where the market is heading.
 
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