Auctioneers And Real Estate Sales: Virginia's Legal Stance

Auctions are a common method used to sell a variety of assets, including real estate. The law of auctions is extensive and covers issues such as when a binding contract is made, what warranties apply, and what licenses are required. Auctioneers are agents of the seller and are employed by commission or for a reward. They are responsible for conducting auctions, which involve a series of exchanges between themselves and members of their audience, consisting of invitations for offers, offers made by the audience, and acceptance by the auctioneer of the highest or most favorable offer. While the specific requirements for auctioneers vary by state, in Virginia, the Board of Auctioneers is authorized to take action against any auctioneer or auction firm.

Auctioneer licensing requirements

In the state of Virginia, auctioneers are required to obtain a license from the Board of the Virginia Department of Professional and Occupational Regulation (DPOR). The licensing period is 24 months from the last day of the month in which the license is issued. To become a licensed auctioneer in Virginia, one must:

• Be a resident of Virginia and meet the application fee requirements set by the Board.
• Be covered by a surety bond, executed by a surety company authorized to do business in Virginia, ensuring the faithful and honest conduct of the auctioneer.
• Pass the Auctioneer Exam administered by PSI, after which the applicant receives a pass letter and must submit the Surety Bond to the Auctioneers Board.
• Complete six hours of continuing education as a prerequisite for license renewal or reinstatement. This requirement may be waived or reduced in cases of certified illness or undue hardship.
• Non-residents of Virginia may obtain an auctioneer's license by meeting the requirements for resident auctioneers or by holding a valid auctioneer's license or certificate in another state with which Virginia has established reciprocity.

It is important to note that Virginia does not regulate online auctions, so no license is needed for those. Additionally, certain individuals, such as those auctioning their own property or acting as a receiver, trustee, or attorney-at-law, are exempt from the auctioneer's license requirements.

Real estate broker's license

In the state of Virginia, a license is required by law to practice real estate. The Real Estate Board is responsible for licensing real estate salespersons, brokers, and firms.

To obtain a broker license in Virginia, applicants must meet the following requirements:

• Pass the State portion of the broker examination: The exam is composed of 125 questions, and you will be given 160 minutes to complete it.
• Verify experience: Applicants must submit verification of experience, demonstrating that they have been actively engaged in real estate full-time (at least 40 hours per week) as a salesperson or broker for 36 out of the 48 months preceding the application for licensure.
• Complete pre-licensing education: Applicants are required to complete 180 classroom hours of broker pre-licensing courses. These courses should be substantially equivalent to Virginia's real estate education requirements. The courses must be taken at an accredited university, college, community college, or other approved educational institution.
• Submit transcripts: Applicants must provide original transcripts or certified copies of transcripts from the educational institution where they completed their pre-licensing education.
• Submit letters of certification: If licensed in other jurisdictions, applicants must submit letters of certification from those states.
• Meet basic eligibility criteria: Applicants must be at least 18 years old and have a high school diploma or its equivalent.

Once applicants have met these requirements and passed the broker examination, they will receive directions on how to apply for their license and pay the associated fee.

Auction methodology

In the context of real estate, auctions are a quick and efficient solution for both buyers and sellers. They are often used to sell bank-owned properties, preventing foreclosure. There are three common types of real estate auctions: minimum bid, absolute auction, and reserve auction. In a minimum bid auction, the auctioneer will set a minimum price that will be accepted, which is usually published in the auction listing materials. An absolute auction involves selling the property to the highest bidder without a minimum price. In a reserve auction, the seller can review bids and accept or reject the highest offer within a set period.

It is important to be well-prepared when buying real estate at an auction. This includes researching the auction, setting a budget, inspecting the property, understanding the rules, and seeking professional advice. Some auctions allow financing, but it is crucial to get pre-approved before the auction. Auctions often require payment in cash or a cashier's check for the minimum amount required by the auction holder, so bidders should ensure they have sufficient liquid assets. Additionally, there may be auction fees, bidding fees, and a deposit required. Understanding the terms of the sale, including payment terms, closing dates, and any contingencies, is essential. Legal and financial advice can help buyers navigate the process, avoid pitfalls, and determine the total investment required, including property taxes, insurance, repairs, and maintenance.

Auctioneer authority

In Virginia, the term "auctioneer" refers to any person who conducts or offers to conduct an auction, which includes the sale of real estate. The Code of Virginia Code - Chapter 6. Auctioneers outlines specific regulations that auctioneers must adhere to when facilitating these transactions. One notable provision is the requirement for transparency in advertising auction sales of real property. Auctioneers are prohibited from advertising an auction sale as "absolute" unless all lots included meet this criterion. This ensures that buyers are not misled about the nature of the sale.

The authority of an auctioneer as an agent for the seller typically begins before the auction and may extend after the sale's completion. Their agency is limited and specific, commencing with the acceptance of a bid and concluding with the finalization of the memorandum of sale. Auctioneers are responsible for drawing up and signing this memorandum, which serves as a record of the transaction. It should be noted that in Virginia, the auctioneer is considered the mutual agent of both the seller and the buyer, solely for the purpose of documenting the sale.

To be licensed as an auctioneer in Virginia, individuals must meet specific requirements prescribed by the Board of Auctioneers. The Board is authorized to take action against any auctioneer or auction firm, even if they lack the statutory number of members, as seen in the Court of Appeals of Virginia's decision. This highlights the importance of adhering to the regulations set forth by the Board.

While Virginia law does not explicitly mention the necessity of an auctioneer license for selling real estate, it is important to note that auctioneers must comply with relevant real estate licensing laws. Auctioneers can call bids for real estate, but they may need to work with a licensed broker or realtor to navigate the intricacies of real estate transactions, including contracts, marketing, and earnest money handling.

In summary, auctioneer authority in Virginia is governed by specific laws and regulations outlined in the Code of Virginia Code - Chapter 6. Auctioneers. Auctioneers facilitating the sale of real estate must adhere to licensing requirements, act as agents for both sellers and buyers during the auction process, and comply with relevant real estate laws to ensure lawful transactions. Additional regulations pertaining to auctions in Virginia further emphasize the importance of understanding the legal framework surrounding the role of auctioneers in real estate transactions.

Auction types

Auctioneers in Virginia can sell real estate, and there are several types of auctions that can be conducted in the state.

• Absolute auction — In this type of auction, the auctioneer must not advertise the sale of real property as "absolute" unless all lots included meet this criterion. This means that there are no minimum bids, and the property will be sold regardless of price.
• Online auction — This is a type of auction where bidders participate remotely, placing bids through an online platform. This format is often used for tax auctions and sales of multi-vehicle and personal property.
• In-person auction — This is the traditional form of auction where bidders gather in one place to bid on items. This format is often used for luxury homes, vacant land, farms, investment properties, and commercial and waterfront properties.
• Auto-extend bidding auction — This type of auction is designed to prevent last-minute, unfair bidding practices. When a bid is placed within a certain time frame before the auction's scheduled end time, the closing time is extended to allow other bidders to respond.
• Charity auction — These auctions are conducted by or on behalf of charitable, religious, civic, or fraternal organizations. The person conducting the sale receives no compensation and has no ownership interest in the items being sold.
• Livestock auction — This is a specialized type of auction conducted by an auctioneer from a livestock trade association, where a particular brand or type of livestock is sold.

Frequently asked questions