Land auction is a process of selling property through bidding. Selling a property at an auction is not as simple as it sounds, there are several steps involved in it. Continue reading to know how a land auction actually works in Canada.
The first step of every land auction involves appraisal of subject property. A licensed appraiser is appointed to evaluate the estate and assign it a value. This is the value, the current owner of property will want to get in the auction, but it is not necessary that you always get an auction price equal to or above the appraised value. The evaluation involves taking photographs of the land from different angles, examining the comparable sales and considering various other features, such as the location and size of size, it’s possible future use etc.
After having the land appraised, the auctioneer company will advertise it for sale to inform the general public. Advertising usually takes place through local newspapers, magazines and internet. Sometimes the auction is advertised on television and radio as well. The idea behind advertising the property for auction through multiple channels is to get the word out to as many potential buyers as possible. The more bidders there will be on the auction day, better will be the chance of getting a higher price.
Generally land auctions are held at the subject property, but this is not the case always. The location and time for bidding is also advertised in the original ad. Those interested in bidding must arrive the auction place early, get themselves registered with the company and obtain a number. The auctioneer starts bidding by calling out the prices and interested buyers raise their numbers to show their willingness to pay that particular price. The auctioneer keeps on calling higher and higher prices unless there is only one bidder left. The last person who raises his/her number automatically wins the auction.
The auction winner has to make a part of the payment at the spot – usually it is 10 percent of purchase price. The purchaser has to pay the balance within four weeks from the date of auction. This gives the buyer some time for financing, if needed. However, each auction company has its own guidelines regarding the payment process, so make sure you know the procedure.
Transfer of land is done at the attorney’s office. A new deed is drawn up and all fees are paid before transfer of title takes place. Once all the documents have been drafted and signed, and fees paid, the property is considered transferred to the buyer. The transfer must be registered with the local land record office.