The Joplin Globe, Joplin, MO

Opinion

Discussion

May 22, 2011

Marvin Singleton, guest columnist: Real estate auctions need oversight

By Marvin Singleton Globe Staff Writer

JOPLIN, Mo. — The old standard for auctions has always been “caveat emptor,” which is Latin for “let the buyer beware.” However, much has changed in the past several years due to the collapse of the real estate and housing markets.

Lending agencies have for the past several years suddenly found themselves with billions of dollars of real estate suddenly on the market. Enterprising entrepreneurs have stepped up efforts to hold auctions for these properties. Since there is no longer the auctions’ call for livestock, estate sales and family farms, these entrepreneurs are selling hundreds of homes at one event, with little advanced inspections over the Internet.

Due to the rapid rise in real estate auctions, it is important that sellers of real estate and personal property know exactly what is involved and who they are dealing with. In Missouri, public auctioneers are exempted from provisions of the Real Estate Commission. Anyone can pay $10 for an auctioneer’s license to the county clerk, and for a little more money the license can be extended for a full year. There are neither requirements for education, experience, ethics, professionalism nor provisions for consumer protections or complaints.

Now with the rapid advent of extensive real estate auctions involving millions of dollars, as reported in the Wall Street Journal and others, that can be conducted by licensed auctioneers who are not trained, state government must look to place educational requirements similar to real estate brokers on auctioneers that bid call real estate.

The transactions should be governed by the Real Estate Commission with enforcement powers and consumer protections. The auction laws and auctioneer licensing requirements vary from state to state. There is no U.S. federal law regulating auctions.

Approximately 20 states do not require an auctioneer’s license. The only default mechanism for a consumer, either seller or buyer is the Uniform Commercial Code that governs general commerce. Therefore, not only buyers must be beware, but sellers attempting to sell marketing, advertising and the scope of effort to get buyers to the marketing and scheduling of an auction.

Due diligence in selecting an auction company must be done in view of little or no consumer protections by state agencies or state laws. Companies may show that they have a national presence, Internet capabilities and glitzy promotional literature, but once the listing agreement is signed, the company does not utilize its entire capabilities. Instead markets locally decide not to use Internet bidding or misjudge the scheduling. That puts both sellers and buyers at a disadvantage.

Due to this lack of consumer protections, sellers should never sign away their rights of regress before a jury of their peers if problems exist, nor should they agree to a clause of “binding mediation” in the listing agreement.

Real estate auctions are very effective methods of selling large lots of houses that have been repossessed or are in the possession of the lending institutions, and these will continue.

It is imperative, however, that oversight of real estate auctions be given to state agencies such as the real estate commissions for continued educational requirements similar to that of a real estate broker.

Both buyers and sellers deserve no less.



Marvin Singleton lives in Fayetteville, Ark. He has been a rancher, physician and former state senator from Newton County who recently has been involved in a real estate auction.

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