Online Real Estate Auctions: What You Need to Know
The business of real estate is constantly changing, so it should come as no surprise that residential online real estate auctions are becoming more and more popular. This is a great way for you to find a great deal on a home quickly – provided that you understand the process. Below are a few tips that can help you find your way through online real estate auctions.
What’re You Getting Into
While the concept of auctions has been around for a long time, what is sold at them has changed considerably over the years. Online real estate auctions have two main types of sales: properties that are offered on an absolute basis (this is where the bidder wins the bid even if the bid is lower than they are seeking) and properties sold with a reserve or minimum bid (meaning the seller is often a lender in control of the property and can accept or reject based on their expectations).
An online real estate auction allows the seller to set terms ahead of time, leaving the buyer to decide right away whether to bid or not to bid based on them. This allows the negotiations to happen instantaneously without the common issues and contingencies that are associated with more traditional home sales.
How to Handle Issues
Issues can still happen with this process but if you know how to handle them, you are at an advantage. Take a look at the home as many times as you can before the auction and review any disclosures that may be involved, then assess your bid and make the necessary changes. What you see is what you get when it comes to online real estate auctions. Know before you get started with the auction what you are able to spend and stick to it; don’t get caught up in the excitement of the auction. Also you should know going in that you have no financial contingency; this means that you are only expected to be able to close the sale. You should be ready with further financing and know what money you have available well before the auction begins.
Buying Before or After the Auction
Some properties that will go to auction will be able to be bid on before the sale. If your bid meets with the expectations of the owner then you will be able to close the sale before it even gets started. Similarly, once an auction has been closed there may still be room for you to purchase it. If a seller, often a lender, has set a reserve price that is not met then the property reverts back to them. Oftentimes they will be willing to sell the property at a much lower price simply to get rid of it. Work with the auctioneer to contact the seller and find out if they are willing to take a lower price.
It is becoming increasingly more and more popular for residential homes to go to online real estate auctions; this is something that should be embraced by buyers. Real estate is always changing, so it’s important that you work to know in what ways it is changing and how to get involved with it. Following these tips will allow you to be better equipped and ready for an online real estate auction; you might even walk away with a home that you purchased below market value without the headache of a prolonged home sale that you love.