Do Your Homework Prior to Putting a Bid on a Property up for Auction
By Mark J. Donovan
|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.
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.
|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.|
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.
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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