Real estate auctions have become quite common in the recent times. Unlike the past, when only foreclosures of million dollar mansions led to real estate auction, these days, all types of properties are sold at auctions. However, it should be noted here that when you buy a property through a real estate auction, you will have to purchase it “as is”. You won’t be able to ask the seller to make required improvement.
Here are 10 tips which may make things easier for you when you go to a real estate auction to buy a property:
1. Know the real estate market: Before you go to an auction, it is very important to have knowledge of the real estate market. This will help you quote the correct price while you bid for a property.
2. Prepare yourself financially: You can buy the property through cash purchase or you can even take out a mortgage to buy a property at a real estate auction. You will require a pre-approval letter if you want to take out a mortgage to buy the property. You will also have to provide for the down payment amount.
3. E-mail alerts: When you decide to buy a property through an auction, you can register your e-mail address with various auction websites. They will send you e-mail alerts for auctions depending upon the zip code and price range you have selected.
4. Registration for auctions: If you have seen a specific property and want to take part in its auction, then you can register for it online or in person with the real estate auction company. This will help you get specific information about that property before the auction.
5. Property inspections: Several open houses are arranged before the property goes for the final auction. So, when you go for the open house, make sure that you inspect the property properly. You may even take your own home inspector with yourself.
6. Bidding options: While you can bid by being present on spot, you can even bid for a property online. To get the required information, you can either visit the auction company's website or you can contact their office over the phone.
7. Arrange finances for buyers' premium: You should note here that there are various auction companies who will charge you a buyer's premium. This can be around 5%-10% of the sales price. This is charged mainly to cover the cost of the sale.
8. Pay the deposit: Most of the real estate auction companies will require you to pay a deposit amount. The amount will depend on the estimated property value or a figure which seems suitable to the auction company as well as the seller. You can either pay it through cash or go for a credit card authorization. The money will be held in an escrow account till the auction ends.
9. Abide by the rules: You will have to follow all the rules as set up by the auction company irrespective of whether you bid on phone, online or in person. The seller can keep your deposit if your financing falls through.
10. Quick closing: It should be noted here that you should close the deal within 30-45 days once the auction sale gets over.
If you keep the above mentioned points in mind, it will be easier for you to complete the auction easily. You should set a firm maximum bid so that you can avoid overspending!