Real Estate Auctions and the MLS
Recognizing that auctions are a popular way to market and sell properties, Canopy MLS provides two fields in the MLS system that allow listing agents to list properties accurately and efficiently. The first field is a single-select field titled “Auction Type” from which the listing agent can select “Auction/Reserve,” “Auction/Absolute” or “Online Auction” with “No Value Selected” as the default option. If the listing is not an auction listing, the listing agent would simply leave it on “No Value Selected.”
Remember to use these fields with caution. Individuals licensed only as real estate brokers are advised to act within the scope of his or her licensure, steering clear of the line separating real estate brokers from licensed auctioneers.
The definitions of these options are below.
Auction/Reserve: An auction with reserve, also known as a sale subject to confirmation (this does not mean confirmation by court, only acceptance by the seller), means an auction in which a seller reserves the right to establish a minimum bid, to accept or decline any and all bids, or to withdraw the property at any time prior to the announcement of the completion of the sale by the broker. (NCR Standard Form 601)
Auction/Absolute: An absolute auction, also known as an auction without reserve, means an auction where the real or personal property offered for auction is sold to the highest bidder (i) without the requirement of any minimum bid, (ii) without competing bids of any type by a seller or agent of a seller and (iii) without any other limiting condition of sale. (NCAR Standard Form 601)
Online Auction: Offers are submitted online using a third-party bidding opportunity such as www.bidselect.com, www.realtybid.com, www.HMBIREO.com, etc. Real estate brokers are cautioned to not cross the line separating real estate brokerage from auctioneering. An auctioneer license is required if there will be more than one round of bidding and Listing Brokerages are encouraged to consult with NCREC and the N.C. Auctioneer Licensing Board for guidance.
No Value Selected: This default option should be selected for listings that are not auction or bid listings.
If the listing agent does select one of the auction options, he or she must also select one or more options from the next field, “Auction Info.” From this field the agent can select “Actual List Price,” “Assessed Value,” “Starting Bid” or “Market Value” so Canopy MLS Subscribers will know what the price represents. The listing agent must also include the auctioneer name and auctioneer license number in the “Public Remarks” field, but no other contact information may be included in the “Public Remarks.” Any other contact information or bidding web site, if applicable, must be included in the "Agent Remarks."
Auction listings are distributed to www.realtor.com and IDX web sites.
When Bidding Becomes an Auction. Real estate brokers must be careful not to cross the line separating real estate brokerage from auctioneering. The definition of an auction includes “a series of invitations for offers made by the auctioneer.” In other words, an auctioneer license might be required if there will be more than one round of bidding.
The North Canopy Auctioneer Licensing Board, distinguishes between two types of online auctions: “timed sale” and “live sale.” In a timed sale, bids are accepted for a certain period. When the time runs out, the highest bidder wins, as with eBay. The N.C. Auctioneer Licensing Board does not regulate timed sales.
With live sales, the bidding continues until the highest bid is reached, whether online or by traditional means. Conducting a live sale requires an auctioneer or an auction firm license.
It is interesting to note that real estate law and auctioneer law treat property owners somewhat differently. Real estate law allows owners to sell their own properties without having a real estate license. However, auctioneer law requires property owners to have an auctioneer license if they are in the business of auctioning their own properties.
Treat All Parties Fairly. Keep in mind that the “Canopy MLS Rules and Regulations” Section 3.8 says listing brokerages, in response to inquiries from buyers or cooperating brokers shall, with Sellers’ approval, disclose the existence of offers on the property. The Listing Brokerage shall also disclose, if asked, whether offers were obtained by the listing licensee, by another licensee in the listing firm or by a Cooperating Brokerage. This requirement is based on the Code of Ethics Standard of Practice 1-15.
Additionally, under a rule adopted by the North Carolina Real Estate Commission (NCREC) effective July 2008, brokers are prohibited from disclosing the price or other material terms contained in a party’s offer to purchase, sell, lease, rent or to option real property to a competing party without the consent of the offering party.
Setting the Minimum Bid Price. The “Auction Info” field allows users to indicate whether the list price shown in the MLS is an actual list price, assessed value, market value or starting bid.
Auctioneer Info Disclosure Required. If “Auction/Reserve” or “Auction/Absolute” is selected, or if the bidding will follow the live-sale format discussed above, then the auctioneer name and auctioneer license number must be included in the “Remarks” field in the MLS system. Failure to include this information violates the “Canopy MLS Rules and Regulations.”
Avoid Inappropriate Branding. If there is a bidding web site, it must appear in the “Agent Remarks” to avoid violating Section 1.8 of the “Canopy MLS Rules and Regulations,” which says, “Branding is prohibited in the “Public Fields” of a listing defined as fields provided on the Customer Report, Client Gateway, and distributed in the IDX Database, including but not limited to Photos, Photo Captions, Virtual Tours and videos, Directions, Remarks, Restrictions (Lots/Acres/Farms, and Commercial).” “Branding” is defined as any information that might lead a consumer directly back to the listing agent, Listing Brokerage or Seller, including, but not limited to: phone numbers; e-mail addresses; web sites that give reference to the listing agent, Listing Brokerage or Seller; company and/or personal names; “for-sale” signs (excluding signs required by neighborhood restrictions if the text of the sign is illegible); logos; slogans; recorded sound that gives reference to the listing agent, Listing Brokerage or Seller; and theme songs.
Please note that contact, marketing and promotional information is allowed in the Agent Remarks, Company Remarks and Syndication Remarks only.