All About Buying at a Real Estate Auction - Benefits, Preparation, Facts, and General Information

General Information:

There are three types:

1. 
   Absolute: There is no minimum bid required. The real estate is sold to the highest bidder.


2. 
   Minimum Bid: Seller sets minimum bid for the real estate. If the minimum bid is not met, then the seller is not obligated to sell. Seller and highest bidder can meet in private to work things out if possible. Auction still gets paid for that service.


3. 
   Reserve: Allows seller to reserve the right to accept or reject the highest bid within a 72-hour spam of time. Seller is not obligated to sell to the highest bidder. Seller may not have set price in mind.

How The Auction Works:

• The sellers may include home owners, as well as, banks that have received a property back (typically due to foreclosure), hire a third party company to advertise and host the Auction event.


• The sellers determine the minimum amount they will accept for the house and any other terms and conditions.


• Persons interested in purchasing from the Auction, will receive a list of addresses for the homes which will be up for Auction on the following day.  Other details are listed, including the minimum amount the seller will accept.


• Buyers are able to drive to homes of interested to view before placing a bid.


• Once a home is picked out and the Buyer has decided a price to offer, a bid is placed.  There is limited time to do this, you may only have 24 hours to view homes before the Auction takes place.  The good news is, Auctions are held very frequently so if you don’t get a house on the first run, there are more to come.


• Buyers may be required to show proof of funds and earnest money before being allowed to place bids.

Benefits for Buyers:

• Buyer is setting own Market Value on property at purchase.


• Buyer is not relying on realtor or appraiser to set the price.


• Avoids long negotiations between Seller and Buyer.


• One can have it NOW. Most auctions last less than two hours depending on number of properties that day.


• Auctions set a level playing field for every buyer. The highest bidder wins.


• Auctions allow ample time for buyers to review property and do any research on the property so one is prepared at auction. One should only bid to their maximum. A bidder must avoid getting caught up in the moment. Common sense must prevail at Auction and not one’s emotions.


• Buyer can offer anything on the home either lower or higher.


• Terms set by seller before auction so there are no surprises.

Facts:

Buyers have opportunity.  Would you believe that over 60 billion dollars worth of real estate is sold at auction in the United States on annual basis? The National Association of realtors has predicted that by the year 2010, 30% of all real estate transactions will be conducted through auctions.  Foreclosure homes are sold this way and individual sellers are realizing benefits of using this method. 

Preparation:

Buyers must come prepared to the auction knowing what one is willing to pay for a piece of real estate, take emotions out of the equation. One must do their homework to be fully educated and prepared to roll out a decision. Here are my personal recommendations when preparing for auction:

1. Hire a realtor who specializes in real estate investments.

2. Request Bidders Package from auction or visit web site. The package will include the following such as rules of engagement at auction, any inspection reports, title, zoning concerns, and required deposits, any available financing and closing expectations.

3. Realtor will conduct a true comparative marketing analysis on each property that a buyer will bid on. This avoids the buyer over bidding on a property.

4. Physically inspect the property to tally up repairs needed to the property along with any other facts on the property. These costs must be considered when bidding on a property.

5. Attend a few auctions to become comfortable with the process. Observe other peoples actions.

Conclusion: The real estate auction method of buying is growing at a rapid rate as demonstrated in this article. A buyer must not be overtaken by speed and emotion present at auction. Hiring a realtor is there to provide a truly business transaction and save one from acting on emotions. Real estate bargains do not come easy at the auction. One must do the homework and be prepared at auction to snap up the bargain. Please review the advantages listed above for both sellers and buyers at real estate auctions. The seller has the overall advantage at auction if one is not prepared. They are hired by the seller to obtain the highest price for the real estate being offered at the auction. The auction company gets paid when the property closes. So, they have the seller’s best interest in mind. The Real Estate and Beyond Network is fully prepared to represent bidders at auction. .

All About Buying at a Real Estate Auction - Benefits, Preparation, Facts, and General Information