More Brokers are Riding the Real Estate Auction WaveFebruary 14th, 2011 by PA - Bloger
1) Refer clients
2) Be a cooperative broker/agent
3) Be a listing broker/agent.
Clearly, the most financially advantageous of the three is to be the listing broker/agent, where some brokers can make 2% or possibly more in commissions. The role of the broker/agent can be similar to that in a traditional sale. According to realtor.org, the broker/agent “manages many traditional real estate functions and shares the commission based on the amount of involvement and the relationship defined by the parties involved. This relationship is beneficial for auctioneer and agent when services by a local auction or real estate company are needed or when an agent identifies a potential auction situation for a seller and the agent is not an auctioneer.”
Some of the standard responsibilities of a broker/agent in a real estate auction include providing the lead, completing due diligence, obtaining bids for maintenance, and helping bidders with the pre-qualification process. During the actual auction, a broker/agent can assist the auctioneer in the bidding process if support is needed. After the auction, a broker/agent often aids the buyer with matters such as inspections, insurance and financing. A commission check is received upon closing of the property. Types of agreements employed in the auction process can include a listing contract between the broker/agent, auction company and seller; or a pre-auction sales contract and addendum.
The other two ways for a broker/agent to represent a client in a real estate auction are also lucrative. When acting in a referral role, the broker/agent simply refers a client to an auction company and then collects a referral fee; whereas a cooperative broker/agent role is more involved – they sell a property at auction as the subagent, buyer’s agent or dual agent. Realtor.org states, “A cooperating agent or broker registers a buyer who purchases property offered through an auction and earns a commission established by the auction firm. This agent or broker accompanies the bidder to pre-auction events and the auction, registers him to bid, and receives a portion of the commission.”
It’s evident that real estate auctions are benefiting more than just investors. Many real estate professionals recognize the market growth and monetary potential of real estate auctions and see them as a profitable asset to the industry.
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