How to Purchase Real Estate in an Auction

At real estate auctions the auction house, the company that conducts auctions, acts as the intermediary between the seller and the purchaser. It’s not necessary to have a real estate agent represent you in an auction. Real estate offered in auctions is sold”as-is,” significance in its current condition on the day of the sale–no repairs will be made until it’s sold for you. Regardless of a house’s condition, buyers are under obligation to purchase a property obtained at a bid. Educate yourself by performing research on the property and the auction process prior to attending one.

Find a list of the properties to be auctioned ahead of time from the auction house. Buyers have the option to inspect properties up to the day prior to the auction–the land might not be readily available for viewing or review on auction day . Stop by each property of interest and analyze them thoroughly–the interior, exterior, and yard or surroundings. If you’re not familiar with assessing real estate or estimating land repair costs, bring a general builder with you.

Estimate the value of these properties to be offered at auction. In order to learn how much to bid on every property, figure the current market value (the price the property is worth now ). Realtors will charge a minimal fee to provide you.

Arrange financing prior to the auction. A winning bidder is obligated to complete buying a property at auction, whether the bidder gets financing lined up or not. Get ready for a loan by a lender to find out how much you can spend in auction. Hard money lenders provide fast, simple financing on investment properties, but charge financing fees. Bank lenders also finance properties purchased in auction and charge lower financing fees than hard money lenders, however, the bank lending process takes more time to arrange.

Bring the specific amount of money necessary for the deposit or a cashier’s check. At most auctions, you’ll be required to make a deposit of $10,000 or 10% of the purchase price–whichever is higher. The auctioneer will require the deposit in certified funds. The deposit is nonrefundable. In many auctions, a buyer’s premium is added to the winning bid. This premium is added into the entire purchase price of the property. Arrange for sufficient funds to pay the buyer’s premium as well.

Arrive. At registration you’ll be assigned a bidder number to use during bidding. You’ll have to show photo identification and proof of your current address. A driver’s license or ID card is sufficient. During enrollment, buyers have the opportunity to ask certain questions concerning the properties to be auctioned. Each buyer must register documentation saying that he knows and agrees to the auction provisions.

Bid discreetly and nonchalantly by increasing your bidder number calmly. Keep taking a look at the auctioneer during the time that you’re bidding. Avoid looking around to find out what other bidders are doing while you bid. If other bidders are aware that you desire a particular property badly, it might drive up the price. Decide upfront how much cash you’re ready to spend. Don’t let the other bidders affect you to bid higher than you had intended.

Sign the bid confirmation type and the contract upon winning the bid. Speak to your lender and get the funds to purchase the property. Closing will take place within 30 days of purchasing the auctioned property. Legal title to the property will be moved by the seller to the purchaser at closing.

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