Real estate auctions give you the chance to purchase a property at a price that can be far below market value. Unfortunately, bidding at an auction doesn’t supply you with exactly the same length of time to research a piece of property that purchasing via a conventional transaction with a real estate owner or real estate agent does. Even though you’re able to come away from an auction with a fantastic deal, you can even end up with a money pit. To prevent walking away with a piece of property worth less than you spent on it, you should prepare as much as possible before the auction. Going into the auction well prepared can make the difference between getting that fantastic deal or dealing with buyer’s remorse.
Research the specific property you are interested in bidding on prior to the auction. Research the real estate market for the region to get an notion of the present selling price for houses. Get in touch with a real estate agent to get the market deals in the region for recently sold houses.
Take advantage of any opportunities to inspect the property; many auctions permit pre-auction inspections. Walk through the property with a general contractor that will look for any obvious repair needs and counsel you as to prices. If an inspection is not accessible, see the property site and take pictures so you are able to examine the place for glaring flaws in the construction of the house.
Set your highest bidding amount based on the property you are interested in. Prequalify for a mortgage up to a maximum before the auction. This will ensure that you have sufficient funds to cover the price of the property should you win the auction.
Ask the auctioneer. Figure out whether you’ll have the right to rescind the contract for a specified period after the auction. This permits you to pull from the deal without being responsible for a large fee should you don’t close the transaction. Inquire regarding any reserve amount that bidders have to meet, should so be certain your winning bid is over the amount or you might not receive the property even if you win the auction. Ask if you’ll be forced to pay a buyer top should you win the auction; this excess cost can add up to 10 per cent to the property price.
Find a bank check big enough to pay for the required deposit on the property. Normally, the deposit will be 5 percent of their winning bid.
Bring the bank check and photographs of the property together with one to the auction. The photographs will assist in identifying the right property to bid on if multiple properties are being supplied, and the check ensures you’ll have the deposit available should you win.