How To Buy Bargain Property At Auction
Do Your Homework Prior to Putting a Bid
on a Property up for Auction
By Mark J. Donovan
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One way to buy a home inexpensively is by participating in a
property auction. Buying property at auction is typically for the real
estate professional, however if a prospective homebuyer does his or her
homework upfront they can participate in an auction and in some cases get a
real bargain.
Real estate properties sold at auction are often bank owned properties that the banks
are simply trying to dump to recoup all or at least a portion of the
mortgage. Municipalities also occasionally sell property at auction.
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The property has either been taken over by the municipality due to unpaid
tax liens, or the previous deceased owner of the property has no next of
kin.
Property auctions occur for one main reason: to sell the property fast.
As a result, bargain deals can often be acquired at property auctions.
Locating a Real Estate Property Auction
Property auctions are typically conducted for real estate
professionals. Advertisements and public notice for property
auctions are not always easy to spot, again unless you are a
professional real estate person. This said, if you do your
research you can find out about upcoming property auctions. One
of the best places to look is online. Do some simple online
searches in your town for property auctions and you'll find
them.
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Also keep your eyes open around town for
homes listed for sale, and particularly
ones that specifically state "for sale by
auction". When you see a property listed
"for sale by auction", call the number on
the sign. In some cases you may get a real
estate agent for the property and in other
cases you may get the actual auction house
who is auctioning off the property. If you
get a real estate agent ask for the
auction house name and phone number and
contact them directly. You may need to be
persistent because often the real estate
agents are not excited about their
property listing being auctioned off.
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If it turns out the property is not for you
after speaking to the auction house ask them
to put you on their mailing list. There may be
a small fee for this service, but it can be
well worth the cost if you truly want to go
down the property auction path for buying a
new home.
Before Bidding on a Property up for Auction
Once you've identified a piece of auction property you're
interested in buying make sure you get a professional and
independent property valuation of the home, and arrange for
financing with a mortgage bank. You may want to ask the bank for
a property appraiser that they use as it can help in securing
pre-financing. It's important to keep in mind that when you win
a bid you're legally responsible for purchasing the property. In
addition, you need to complete the purchase within a set number
of days of winning the auction.
Due to the seriousness of winning a bid at auction it is wise to
attend a couple of auctions prior to actually bidding on a piece
of property.
Winning your Auction bid
The most important thing to remember when bidding on a piece of
property at auction is not to exceed your price limit. You
should set a price limit prior to showing up at the auction and
you should stick to it. Do not let emotion get the best of you
during the bidding process at an auction. You should be able to determine your price
limit by having a valuation of the property done prior to the
auction.
If you have the winning bid you will be required to make a
deposit on the property at the closing of the auction. You will
also be required to sign a contract committing you to the
purchase of the property. Typically you'll need to complete the
purchase of the property in 30 to 60 days.
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